Wednesday, September 30, 2015

Letter to Congress on international tax policy

I've joined 23 other law professors, economists, and practitioners in signing this letter to Congress concerning international tax policy.  It argues against adopting a territorial tax system - especially if it's what I would call crude "cartoon territoriality," rather than a system that, whatever its name, seriously addresses profit-shifting and the use of tax havens to undermine U.S. tax revenues. It also calls for anti-inversion legislation, and criticizes both repatriation tax holidays (or deemed repatriations at too low a rate) and the proposed creation of a U.S. "patent box" regime.

Inevitably for a document with so many signatories, it doesn't convey the precise message and nuance that I might have chosen in a sole-authored letter. For example, while I'd like to repeal deferral and make U.S. companies' foreign source income currently includable, I would want the U.S. tax rate for such income to be significantly lower than that for U.S. source income, and I also don't believe in full foreign tax creditability. (See, for example, the brief discussion that I recently posted here.)

But one would never get 24 signatories, from the sorts of people (myself included) who signed this letter, without keeping it at a more general level that we all can accept, in the hope of maximizing the positive public impact. Insert here the standard reference to herding cats.

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