A Corporate Offshore Profits Transition Tax
Susan C. Morse
University of California Hastings College of the 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: K34Accepted Paper Series
Date posted: November 14, 2012 ; Last revised: February 3, 2013
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