US Corporate Tax Reform: Why is a Worldwide Tax System Absent from the Debate?

Abstract

Reform of the U.S. international tax policy is under consideration in Congress. Policymakers are concerned with both reducing tax disincentives to repatriate earnings to the U.S. and with constraining business tactics to move U.S. income offshore. We argue that to achieve significant tax reform, policymakers should generate reform alternatives based on ideas that are shared across partisan and ideological divides. The common ground among political perspectives includes broadening the tax base and lowering tax rates, simplifying the tax code, and assuring U.S. corporations pay their fair share while remaining competitive in the global economy. Most proposals are centered on changing the current tax system into a territorial system rather than preserving some form of worldwide system. Informed by recent research, we present arguments favoring a burden-neutral worldwide tax system as the basis for U.S. international income tax reform.

Keywords: international, worldwide, territorial, tax reform, tax policy, corporate