Thursday, April 24, 2008
J. Clifton Fleming, Jr. (BYU) presents Some Perspectives from America on the Worldwide Taxation vs. Territorial Taxation Debate (with Robert J. Peroni (Texas) & Stephen E. Shay (Ropes & Gray, Boston)) today at Central European University, Budapest, Hungary. Here is the abstract:
This debate is usually framed as a contest between the highly flawed U.S. system of taxing the worldwide incomes of U.S. residents vs. a well-designed system under which foreign active business income of U.S. multinational corporations would be exempt from U.S. tax. This is a highly prejudicial approach that virtually assures a victory for the exemption alternative. A properly framed debate would match a well-designed worldwide system against a well-designed exemption system. When this is done, we conclude that efficiency considerations and ability-to-pay fairness considerations indicate that worldwide taxation with a foreign tax credit is the better approach. We also conclude that the new ownership neutrality defense of exemption systems is unsuccessful.