"Old Rules and New Realities: Corporate Tax Policy in a Global Setting"

Michigan Law Authors
Areas of Interest
Publish Date
National Tax Journal
Publication Type
Journal Article

This paper reassesses the burden of the current US. international tax regime and reconsiders well-known welfare bench- marks used to guide international tax reform. Reinventing corporate tax policy requires that international considerations be placed front and center in the debate on how to tax corporate income. A simple framework for assessing current rules suggests a U.S. tax burden on foreign income in the neighborhood of $50 billion a year. This sizeable US. taxation of foreign investment income is inconsistent with promoting efficient ownership of capital assets, either from a national or a global perspective. Consequently, there are large potential welfare gains available from reducing the U.S. taxation of foreign income, a direction of reform that requires abandoning the comfortable, if misleading, logic of using similar systems to tax foreign and domestic income.

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