Paul L. Caron

Monday, May 12, 2014

Sullivan Reviews Shaviro's Fixing U.S. International Taxation

FixingMartin A. Sullivan (Tax Analysts) Book Review, 74 Tax Notes Int'l 492 (May 12, 2014) (reviewing Daniel N. Shaviro (NYU), Fixing U.S. International Taxation (Oxford University Press, 2014)):

When it comes to international taxation, House Ways and Means Committee Chair Dave Camp, R-Mich., and professor Daniel N. Shaviro of New York University Law School have a lot in common. In the age-old debate between the two poles of worldwide and territorial taxation, they want compromise. They want to achieve a balance between promoting competitiveness and preventing excessive profit shifting to tax havens.

A pro-business conservative, Camp would have preferred his plan to lean more in the direction of multinational competitiveness. But in his three-year quest for tax reform, the chair has learned by doing, and what he has learned from the revenue estimators at the Joint Committee on Taxation is that moving to an exemption system is too expensive without tough measures to discourage profit shifting. Shaviro's path to compromise is based on his own reasoning after extensive review of the legal and economic scholarship on international tax.

The main way Camp and Shaviro seek to achieve a balanced approach is by setting the average effective rate on foreign-source income of U.S. multinationals somewhere below the statutory corporate rate and somewhere above zero. Although this conclusion would hardly be startling to a newcomer to the study of international tax -- and is the practical result under current law for many taxpayers because of deferral -- the traditional debate on international tax does not easily lend itself to compromise. ...

In a mere 200 pages, Shaviro provides his readers with an invaluable guide through the economic and legal ideas that have framed the debate on international taxation for the last 50 years. But the literature review is ancillary. The true value comes from Shaviro's proposals and ideas. The subject matter is unavoidably complex, but he strives to boil down the material to the stuff that helps us achieve the task assigned in the title of the book. His explanations are clearly developed and rational so that readers with only a minimal background in international tax can follow even the most difficult issues. Unlike so much that is written on international tax, there is no ostensible pro- or anti-business slant and no political bias.

Stylistically, Shaviro writes in plain language that suggests all the highfalutin talk about international tax policy may just all boil down to common sense. On top of all its other virtues, Shaviro's book is timely: If lawmakers follow through on the ideas floated by Camp and Baucus, we may be experiencing the largest changes in U.S. international taxation since the inception of the income tax. If you are striving for a true understanding of the issues involved in this historic transformation, you are lucky Shaviro wrote this book when he did.

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