A GILTI High-Tax Exclusion Election Would Erode the U.S. Tax Base

165 Tax Notes Fed. 1129 (2019)

19 Pages Posted: 6 Dec 2019

Date Written: November 18, 2019


This article is slightly edited from a public comment letter originally submitted to Treasury and the IRS. The article argues that the proposed elective expansion of a high-tax exclusion from the reach of GILTI is inconsistent with the statute, loses revenue, and exacerbates the TCJA’s failure to allocate and disallow expenses incurred to earn foreign income exempted from U.S. taxation. The article explains that allowing a deduction for expenses incurred to earn exempt foreign income is a subsidy for the foreign investment. Taxation of the income to which the expense would be allocated by another country does not alter the character of the expense allowance, against other taxable income, as an unjustified subsidy by U.S. taxpayers of U.S. multinationals’ foreign investments.

Suggested Citation

Shay, Stephen E., A GILTI High-Tax Exclusion Election Would Erode the U.S. Tax Base (November 18, 2019). 165 Tax Notes Fed. 1129 (2019), Available at SSRN: https://ssrn.com/abstract=3490053

Stephen E. Shay (Contact Author)

Boston College Law School ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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