Thursday, September 9, 2021
Reuven S. Avi-Yonah (Michigan; Google Scholar), Gucci Gulch Redux: The Problems of the Wyden Proposal, 172 Tax Notes Fed. 1417 (Aug. 30, 2021):
In this article, Avi-Yonah critiques a recent U.S. tax reform proposal that would overhaul the global intangible low-taxed income, foreign-derived intangible income, and base erosion and anti-abuse tax regimes.
The Wyden proposal states that it is “a starting point for conversations in the Democratic caucus on how to reform the international tax system to meet shared goals.” I would suggest that there is a much better starting point, namely the Biden administration proposal. On every point that the Wyden proposal is different than the administration proposal, it is inferior.
The only good points in the Wyden proposal are those that it aligns with the administration proposal (for example, eliminating QBAI and adopting CbC for GILTI). Whenever it deviates, as in the high-tax exclusion, retaining FDII, retaining BEAT, and retaining the participation exemption, the Wyden proposal is closer to the TCJA (enacted over the opposition of every Democrat in Congress) than to the Biden administration proposal. This is truly a return to Gucci Gulch, with the corporate lobbyists running the show.