Thursday, April 6, 2017
J. Clifton Fleming Jr. (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Harvard), Getting from Here to There: The Transition Tax Issue, 154 Tax Notes 69 (Mar. 27, 2017):
If there is fundamental U.S. international income tax reform, regardless of the reform option chosen, the United States must decide how to handle the $2.4 trillion to $2.6 trillion of previously untaxed foreign income accumulated by U.S. multinational corporations. In this report, Fleming, Peroni, and Shay argue that the proper approach is to treat the income as a subpart F inclusion in the year before the effective date of fundamental reform and to tax it at regular rates with an option to make the payments in installments that bear market-rate interest.
The authors explain why the case for a low or deferred tax on this income is inferior to the case for full immediate taxation.