We study the macroeconomic consequences of international profit shifting by multinational enterprises (MNEs) and tax reforms designed to curb this behavior. We develop a theory in which MNEs shift profits by exploiting intangible capital transfer pricing rules. We show that at the micro level, profit shifting increases MNEs’ incentives to invest in intangible capital, increasing their output both at home and abroad. We then quantify the aggregate effects of the two reforms proposed by the OECD to reduce profit shifting, finding that (i) reallocating the rights to tax MNEs’ profits to the countries where they sell their products; and (ii) a minimum global corporate income tax. Both reforms would reduce profit shifting substantially, but (i) would reduce global output substantially whereas (ii) would have little macroeconomic impact. Both reforms would increase high-tax countries’ national incomes, but would also reduce their wages and profits.