Friday, November 23, 2007
Lawrence Lokken (Florida) has posted Income Effectively Connected with U.S. Trade or Business: A Survey and Appraisal, 85 Taxes ___ (2007), on SSRN. Here is the abstract:
The United States imposes two income taxes on foreign persons: a withholding tax on dividends, royalties, and other "fixed or determinable annual or periodical" income and an effectively connected income tax. The latter tax only applies to foreign persons that carry on trades or businesses in the United States and, for these persons, it is imposed, at the graduated rates applicable to U.S. persons, on net income effectively connected with U.S. trades or businesses. This paper is about the effectively connected income tax. It surveys current law on the subject and offers several suggestions for legislative changes that would make the effectively connected income tax more transparent and less confusing to taxpayers, tax practitioners, and students.