What Corporate Inversions Teach About International Tax Reform

Abstract:     
President Obama has implemented a task force to study fundamental tax reform, and an honest debate about U.S. international tax policy is needed. The corporate inversion phenomenon provides an important insight into basic mistakes in U.S. international tax policy. The report examines those mistakes that exist in current law and discusses why they have made corporate inversions so attractive. The report addresses how policy-makers should re-orient their approach to enact tax laws that raise revenue but do not violate norms of capital ownership neutrality. The report provides several suggested revenue-raising provisions that would satisfy capital ownership neutrality. As such, these revenue raising provisions would not favor foreign-based companies over U.S.-based companies. The report argues that Congress and the Obama administration should seek tax reform that does not violate the norms of capital export neutrality or it risks destroying the very tax base that it seeks to tax.

Number of Pages in PDF File: 23

Accepted Paper Series