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Unintended Consequences: How U.S. Tax Law Encourages Investment in Offshore Tax Havens

David S. Miller

Proskauer; Proskauer Rose LLP

October 4, 2010

The Internal Revenue Code is riddled with features that allow U.S. taxpayers to reduce their federal tax liability by operating through tax haven companies. Some of these provisions are historic anomalies. Others are better understood as inadvertent loopholes than considered legislative grace. Some incentives are indeed intentional.

The paper catalogues the many ways that U.S. federal and state tax law encourages taxpayers to operate through foreign tax haven companies to reduce their tax liabilities, and attempts to explain the history and policy underlying the rules. The paper then offers a number of suggestions to eliminate the inadvertent incentives that encourage U.S. taxpayers to form foreign corporations and operate through them solely for tax purposes.

Number of Pages in PDF File: 71

Keywords: income tax

JEL Classification: H20, H21, H23, H24, H25, H26

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Date posted: October 1, 2010 ; Last revised: January 15, 2011

Suggested Citation

Miller, David S., Unintended Consequences: How U.S. Tax Law Encourages Investment in Offshore Tax Havens (October 4, 2010). Available at SSRN: https://ssrn.com/abstract=1684716 or http://dx.doi.org/10.2139/ssrn.1684716

Contact Information

David S. Miller (Contact Author)
Proskauer ( email )
Eleven Times Square
New York, NY 10036-8299
United States
Proskauer Rose LLP ( email )
11 Times Square
New York, NY 1036
United States
(212) 969-3006 (Phone)
(212) 969-3006 (Fax)
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