TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, January 28, 2013

Goulder: The Pepperdine Papers: International Tax Advice for Obama's Second Term

Tax Symposium GraphicRobert Goulder (Tax Analysts), The Pepperdine Papers: Advice for Obama's Second Term:

Last week, the Pepperdine Law Review hosted a unique policy forum: Tax Advice for the Second Obama Administration. The event was organized by Professor Paul Caron and cosponsored by Tax Analysts. Three of the featured papers addressed international reforms and are highlighted below. You can read a synopsis of the Pepperdine conference on Professor Caron's web site, TaxProfBlog and view the video here [list of papers here].

Professor Reuven Avi-Yonah (University of Michigan) segmented his advice chronologically [Corporate and International Tax Reform: Proposals for the Second Obama Administration]. ...  Avi-Yonah claims his recommendations (even the minimum tax on foreign profits) do not necessarily conflict with the business sector's demand for a territorial system. It's possible, he says, to achieve territoriality via an inbound dividend exemption — but only after (i) some minimum level of tax has been paid on foreign profits, and (ii) transfer pricing leakage has been fixed. What's most thought-provoking about his paper is the notion that those two reforms might actually enable a shift to a territorial system.

Professor Susan Morse (UC Hastings College of Law) placed the spotlight on aggressive transfer pricing [The Transfer Pricing Regs Need a Good Edit]. She says the task of allocating income and deductions among the foreign affiliates of a large multinational will remain problematic regardless of whether Congress adopts a territorial system. She warns that pressure on current transfer pricing rules will intensify under a territorial regime. ...

Finally, Professor Allison Christians (McGill University) spoke of recent seismic shifts in international taxation [Putting the Reign Back in Sovereign: Advice for the Second Obama Administration ]. As she sees it, the onset of FATCA (the Foreign Account Tax Compliance Act) and EITI (the Extractive Industries Transparency Initiative) reflect the mercenary tendencies of the nation state to assert jurisdiction in ways formerly thought untenable. Christians embraces the notion of information exchange, in theory, but questions whether the compliance burdens are reasonable. Reciprocity remains a legitimate issue. It can be argued that dual-resident Canadian nationals are hard done by FATCA. Personally, I consider her discussion of EITI as the revelation of the conference. Few tax professionals are even aware of the regime's existence. Bravo to Professor Christians for highlighting the issue and framing the issue in such an insightful manner.

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