A Hitchhiker's Guide to Outbound International Tax Reform

24 Pages Posted: 8 Nov 2014

See all articles by J. Clifton Fleming

J. Clifton Fleming

Brigham Young University - J. Reuben Clark Law School

Robert J. Peroni

University of Texas at Austin - School of Law

Date Written: September 27, 2014

Abstract

In this article, we argue that although some U.S. international income tax reforms, such as limitations on earnings stripping, can be handled by targeted legislative action, broad reform of the U.S. international income tax system should take place only as part of a general revision of the U.S. corporate income tax. We further argue that U.S. international income tax reform should not lose revenue, should take fairness issues into account, and should discount the competitiveness and complexity arguments. We also explain that broad U.S. international income tax restructuring should eschew both an explicit territorial system and formulary apportionment (although either would be better than the current U.S. regime) and, instead, should revise the current, badly flawed, U.S. worldwide system into a real worldwide system by abolishing deferral and severely limiting cross-crediting. We recommend strengthening this real worldwide system by correcting flaws in the source rules, limiting earnings stripping, repealing the Section 911 exclusion, and expanding the Section 904(j) de minimis rule and making it mandatory.

Keywords: Income Tax, International Taxation, Tax Reform, Outbound Taxation, International Law

JEL Classification: E61, E62, F23, H21, H25, H26, H87, K34

Suggested Citation

Fleming, J. Clifton and Peroni, Robert Joseph, A Hitchhiker's Guide to Outbound International Tax Reform (September 27, 2014). Chapman Law Review, Vol. 18, p. 133, 2014. Available at SSRN: https://ssrn.com/abstract=2520222

J. Clifton Fleming (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

Robert Joseph Peroni

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

727 East Dean Keeton Street
Austin, TX 78705
United States

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