Repatriation Tax: Are We Churchill or Chamberlain?

8 Pages Posted: 10 Oct 2014

See all articles by Calvin H. Johnson

Calvin H. Johnson

University of Texas at Austin - School of Law

Date Written: September 22, 2014

Abstract

Under current law, earnings of a foreign subsidiary are not subject to tax until they are repatriated. At repatriation, the U.S. parent pays 35 percent corporate tax, less foreign tax credits. A tax on repatriation has no effect on repatriations, by mathematical law, if the tax remains. If the United States reduces or forgives the tax in the foreseeable future, U.S. corporations will delay repatriation to take advantage of the reduction. This project proposes an increase in tax on repatriation after a short window during which the 35 percent tax, less foreign tax credits, will remain. The increase will induce corporations to repatriate their foreign earnings within the window to take advantage of the relatively generous 35 percent rate.

Suggested Citation

Johnson, Calvin Harsha, Repatriation Tax: Are We Churchill or Chamberlain? (September 22, 2014). Tax Notes, Vol. 144, No. 12, 2014, U of Texas Law, Public Law Research Paper No. 620, Available at SSRN: https://ssrn.com/abstract=2507269

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

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