White Paper on Eliminating the Water’s Edge Election and Moving to Mandatory Worldwide Combined Reporting

10 Pages Posted: 4 Aug 2018

See all articles by Darien Shanske

Darien Shanske

University of California, Davis - School of Law

Date Written: August 2, 2018

Abstract

All forty-four states with corporate income taxes must consider how to respond to changes that the Tax Cuts and Jobs Act made to the federal corporate tax treatment of multinational corporations. In particular, the states must consider how to respond to two new anti-base erosion provisions at the federal level: GILTI and the BEAT. Here are a few of the options: 1) The states can choose not to conform to these provisions. 2) The states can choose to piggy-back on these provisions with little change. 3) The states can choose to piggy-back on these provisions, but do so strategically. That is, a state could choose to institute superior versions of these taxes. There is a lot of room for improvement. 4) The states can also choose to go back to the future and require mandatory worldwide combined reporting. This White Paper presents several reasons for why now is the time to consider mandatory worldwide combination and proposes specific helpful reforms.

Keywords: State Tax Policy, International Tax Policy, Water’s Edge Election, Combined Reporting

Suggested Citation

Shanske, Darien, White Paper on Eliminating the Water’s Edge Election and Moving to Mandatory Worldwide Combined Reporting (August 2, 2018). Available at SSRN: https://ssrn.com/abstract=3225310 or http://dx.doi.org/10.2139/ssrn.3225310

Darien Shanske (Contact Author)

University of California, Davis - School of Law ( email )

400 Mrak Hall Dr
Davis, CA CA 95616-5201

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