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A Corporate Offshore Profits Transition Tax

Susan C. Morse

University of Texas at Austin - School of Law

January 23, 2013

91 N.C. L. Rev. 549 (2013)
UC Hastings Research Paper No. 10

Congress might repeal the residual U.S. tax imposed when non-U.S. subsidiaries repatriate earnings to U.S. parent corporations. Repeal would raise the transition issue of how to tax the $1 trillion to $2 trillion of offshore earnings held by such non-U.S. subsidiaries. This article proposes a 5%-10% corporate offshore profits transition tax on non-U.S. subsidiaries' untaxed earnings and profits, without downward adjustment for a foreign tax credit. It suggests using the financial accounting measure of unremitted earnings to help determine pre-1987 earnings and police aggressive efforts to reduce the earnings and profits base. The article’s policy analysis is based on the metrics of efficiency, administrability and equity.

Number of Pages in PDF File: 57

Keywords: transition tax, territoriality, repatriation, unremitted earnings, permanently reinvested earnings

JEL Classification: K34

Accepted Paper Series

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Date posted: November 14, 2012 ; Last revised: February 3, 2013

Suggested Citation

Morse, Susan C., A Corporate Offshore Profits Transition Tax (January 23, 2013). 91 N.C. L. Rev. 549 (2013); UC Hastings Research Paper No. 10. Available at SSRN: http://ssrn.com/abstract=2175353

Contact Information

Susan C. Morse (Contact Author)
University of Texas at Austin - School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
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