The 2003 Jobs and Growth Tax Relief Reconciliation Act reduces the tax rate on qualified dividends for U.S. firms and  firms in tax treaty countries. We find evidence that this tax cut has an impact on certain non-U.S. firms: After the tax cut, firms in treaty countries and with low withholding tax rate increase their propensities to pay dividends relative to other firms. This impact is statistically and economically significant. Our results reject the view that the ``come-and-go'' nature of FPI, in contrast to FDI that is more persistent, renders it having little real effect on the invested countries. We reach two conclusions: 1) other than FDI, FPI also has real effects on the invested countries, and 2) U.S. tax policy has both domestic and international implications.