Submission to Senate Committee on Finance International Corporate Tax Reform – Why a Worldwide Full-Inclusion System is Far Better for Our Country and Society than a Territorial System or a Hybrid System that Provides a Continuing Preference to Foreign Income

Abstract

I am commenting on the form that International Tax Reform should take. In brief, the territorial system strongly lobbied for by the U.S.-based multinational corporations (MNCs) standing to benefit from such a system is not what is best for our country or our society. It is bad tax policy in today’s environment where it is so easy for MNCs with their extensive resources and advisors to shift profits from the U.S. and into low-tax countries.

The Senate Committee on Finance international tax reform staff discussion draft (the Proposal), especially Option Y, is a major improvement over a territorial system and I definitely support it. Despite this, I am asking in this letter that the Committee review a number of policy issues that would be much better served by a new taxation system that would truly put the taxation of foreign income on par with the taxation of domestic income. In addition to achieving a number of important tax policy objectives, this system would eliminate the competitive disadvantages that pure domestic taxpayers now face in competing with MNCs.

This is Submission 1 of 7 Comment Letters Provided to the Committee.

Keywords: Tax Reform, International Tax Reform, Territorial System, Deferral System, SFC Chairman's Staff International Tax Discussion Draft

JEL Classification: H21, H25, K34, E62