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Section 965: A Traditional Corporate Tax Policy Evaluation, Jessica C. Kornberg

ExpressO

The American Jobs Creation Act of 2004 dramatically reduced the tax on foreign subsidiary dividend payments to their United States parent companies. By many accounts, §965 introduces perverse incentives into the tax code. Critics of §965 argue that the possibility of a future repatriation holiday encourages multinationals to hoard even greater profits abroad and lobby for their tax-free return. In the long run, §965 may exacerbate rather than mitigate the deferral of foreign source income taxation. Now that §965 is set to expire and the repatriation taxes it triggered have been collected, its full impact is beginning to come clear. …