This paper analyzes the effects of taxation on trade credit financing, which takes the form of accounts payable and accounts receivable. High tax rates discourage investment, and as a consequence, firms in high-tax jurisdictions have greater pretax marginal products of capital than do firms in low-tax jurisdictions. Differences in pretax marginal products of capital create incentives to use trade credit finance to reallocate capital, typically from firms with low tax rates to those with high tax rates. Trade credit can also be used to reallocate taxable income among related parties. Evidence from the worldwide operations of U.S. multinational firms indicates that affiliates in low-tax jurisdictions use trade credit to lend to others: ten percent lower local tax rates are associated with net trade credit positions that are 1.4 percent higher as a fraction of sales. The use of trade credit to get capital out of low-tax, low-marginal product environments is also illustrated by the reaction of U.S. firms to the temporary repatriation tax holiday in 2005, when affiliates with positive net trade credit positions were more likely than others to repatriate dividends to parent companies in the U.S.