TaxProf Blog

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

Tuesday, September 29, 2015

Tax Profs Oppose Territorial Tax System, Offshore Profits Tax Relief

AFTFNews Release:

In an 11-page letter to Members of Congress, 24 international tax experts raise significant concerns about legislative proposals that would seek to close a six-year funding shortfall in the Highway Trust Fund by taxing $2.1 trillion in U.S. corporate offshore profits at a significant discount that would overhaul the way U.S. corporations would be taxed on their future offshore profits.

The letter addresses concepts included in a plan outlined by President Obama and in a framework proposed by Senators Rob Portman (R-OH) and Chuck Schumer (D-NY). Rep. Paul Ryan (R-WI), chairman of the House Ways and Means Committee, is developing a similar proposal for consideration by the U.S. House of Representatives later this fall. Presidential candidate Jeb Bush’s tax plan proposes a territorial tax system and a tax rate on offshore profits of just 8.75%, far below the corporate tax rate of 35%. Donald Trump, who released his tax plan today, also outlined his position on these issues, which may be very different from those discussed in the international tax experts’ letter. Trump would impose a 10% tax on the $2.1 trillion in corporate profits sitting offshore.

Letter signers include Edward D. Kleinbard (USC Gould School of Law), Reuven Avi-Yonah (University of Michigan Law School), Kimberly Clausing (Reed College), Stephen E. Shay (Harvard Law School), J. Clifton Fleming, Jr. (Brigham Young University Law School), Robert J. Peroni (The University of Texas School of Law), Daniel N. Shaviro (New York University Law School), and Robert B. Reich and Emmanuel Saez (University of California at Berkeley).

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Comments

You can spin this however you want; but you can't escape the reality that the US tax rate is 35%, while our trading "partners" have an average 25%.rate. Then when you add the dollar winning the ugly Betty currency contest, the combo doesn't look good for US based companies.

Posted by: Dale Spradling | Sep 30, 2015 8:06:01 AM

"You can spin this however you want; but you can't escape the reality that the US tax rate is 35%, while our trading "partners" have an average 25%.rate."

Marginal tax rates are not effective tax rates. Put "effective corporate tax rate" into Google and this is what it spits back at you before the first link: "Our average effective tax rate is 27.1% compared with 27.7% for the other 30 OECD countries, according to CRS. Profitable corporations paid U.S. income taxes amounting to just 12.6% of worldwide income in 2010, according to the Government Accountability Office."

Posted by: Unemployed Northeastern | Sep 30, 2015 10:49:55 AM