U.S. Taxation of International Income: Blueprint for ReformThis study offers a blueprint for reforming US taxation of international income to accommodate the economic realities of the 1990s, especially heightened competition from Europe and Japan. A guiding theme is to ensure that the tax system helps make the US a hospitable location for R&D facilities and other headquarter activities of multinational firms, and for the production and export of high-technology goods and services. The author recommends a.o. the taxation of direct investment income on a territorial basis and abolition of the foreign tax credit, suggests the allocation of US headquarters expense (including R&D outlays) entirely against US-source income, advocates that only the US tax royalties and fees that are paid from abroad for know-how generated in the US, urges a 10 percent R&D tax credit for all R&D performed in the US, recommends the taxation of portfolio income solely by the resident country, and urges binding arbitration to resolve the growing caseload of transfer pricing disputes. |
Contents
Introduction and Overview | 1 |
Durable Anachronism | 19 |
Traditional Tax Doctrine for International Business Income | 47 |
Copyright | |
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34 percent 50 percent abroad activity allocation amount assets base period billion business income capital gains companies competition corporate income tax corporate tax corporate tax rate debt deduction deferral dividends domestic economic profits equity European Community excess foreign tax exemption export income finance foreign affiliates foreign corporation foreign direct investment foreign firms foreign income foreign sales corporation foreign subsidiary foreign tax credit foreign-source income Fred Bergsten global headquarters costs high-technology income earned income flows incremental credit incremental R&D credit induced R&D interest expense interest payments ISBN paper Japan know-how income method multinational firms OECD portfolio income portfolio investment production R&D expense R&D outlays R&D tax credit Revenue Act royalties and fees rules share shareholders tax competition tax credit limit tax expenditure tax haven Tax Reform Act tax revenue tax treaties taxation technology income tion transfer pricing Treasury United US-source income withholding taxes