Law Commons^™

Formulary Apportionment And International Tax Rules, Reuven S. Avi-Yonah, Zachee Pouga Tinhaga

Book Chapters

Any proposal to adopt unitary taxation (UT) of multinationals has to contend with whether such taxation is compatible with existing international tax rules, and, in particular, with the bilateral tax treaty network. Indeed, some researchers have argued that the separate accounting (SA) method and the arm’s length standard (ALS), introduced in the early twentieth century, are so embodied in the treaties that they form part of customary international law, and are binding even in the absence of a treaty. We disagree, because the unitary approach is just as widely embodied in most of the current international tax treaties, and, where …

Transfer Pricing Disputes In The United States, Reuven S. Avi-Yonah

Book Chapters

In 1988, the US Treasury Department published a study of inter-company pricing (the 'White Paper') that included the following endorsement of the so-called arm's length standard (ALS) for examining the reasonableness of transactions between related parties for tax purposes: The arm's length standard is embodied in all U.S. tax treaties; it is in each major model treaty, including the U.S. Model Convention; it is incorporated into most tax treaties to which the United States is not a party; it has been explicitly adopted by international organizations that have addressed themselves to transfer pricing issues; and virtually every major industrial nation …

The Tax Revenue Capacity Of The U.S. Economy, James R. Hines Jr.

Book Chapters

The United States imposes smaller tax burdens than do other large high-income countries, its 24.8 percent ratio of tax collections to GDP in 2010 representing the lowest fraction among the G-7. The United States also differs from other G-7 countries in relying relatively little on expenditure-type taxes. It follows that there is significant unused tax capacity in the United States that could be deployed to pay the country’s debts, but that the most promising source of additional tax revenue is expenditure taxation that is widely perceived to have very different distributional features than the income taxes on which the U.S. …

International Capital Taxation., Rachel Griffith, James R. Hines Jr., Peter Birch Sørensen

Book Chapters

Globalization carries profound implications for tax systems, yet most tax systems, including that of the UK, still retain many features more suited to closed economies. The purpose of this chapter is to assess how tax policy should reflect the changing international economic environment. Institutional barriers to the movement of goods, services, capital, and (to a lesser extent) labour have fallen dramatically since the Meade Report (Meade, 1978) was published. So have the costs of moving both real activity and taxable profits between tax jurisdictions. These changes mean that capital and taxable profits in particular are more mobile between jurisdictions than …

Closing The International Tax Gap Via Cooperations, Not Competition, Reuven S. Avi-Yonah

Book Chapters

All three major goals of the Volcker task force — reducing tax evasion and loopholes, simplifying the code, and reducing corporate welfare — can be advanced by focusing on the international aspects of the tax gap. These aspects include both enforcement of existing U.S. law on U.S. residents earning income overseas (the evasion issue) and reforming deferral for U.S.-based multinational enterprises (the avoidance issue). To best advance the task force’s three goals, I would propose a change in each of these two major international areas.

Corporate Taxation And International Competition, James R. Hines Jr.

Book Chapters

Many countries tax corporate income heavily despite the incentives that they face to reduce tax rates in order to attract greater investment, particularly investment from foreign sources. The volume of world foreign direct investment (FDI) has grown enormously since 1980, thereby increasing a country's ability to attract significant levels of new investment by reducing corporate taxation. The evidence indicates, however, that corporate tax collections are remarkably persistent relative to gross domestic product ( GDP), government revenues, or other indicators of underlying economic activity or government need. If this were not true- if corporate income taxation were rapidly disappearing around the …

Commentary, Reuven S. Avi-Yonah

Book Chapters

David Rosenbloom has delivered an important lecture on an important topic: whether exploiting differences between the tax system of two different jurisdictions to minimize the taxes paid to either or both ("international tax arbitrage") is a problem, and if so, whether anything can be done about it in a world without a "world tax organization." As Rosenbloom states, international tax arbitrage is "the planning focus of the future," and recently has been the focus of considerable discussion and debate (for example, upon the promulgation and subsequent withdrawal under fire of Notice 98-11). Rosenbloom's lecture is one of the first attempts …

Corporate Income Tax Act Of 1909, Reuven S. Avi-Yonah

Book Chapters

The Corporate Tax Act of 1909 (36 Stat. 11, 112) imposed an excise tax on corporations for the privilege of doing business in corporate form. However, the excise tax was measured by corporate income. Thus the act was the origin of the current corporate income tax, which has been part of our federal tax system ever since and is currently the source of about 10 percent of federal revenues.

In 1895 the Supreme Court decided that Congress could not impose an income tax directly on individuals, because that would violate the constitutional requirement that all “direct” taxes be apportioned (that …

Comparison Of Major Tax And Legal Advantages Of Operating In An Unincorporated Form, Douglas A. Kahn

Book Chapters

As an introduction to the subject of this conference, several topics will be discussed. First, the tax and non-tax consequences of conducting business in a partnership form will be examined and compared with the consequences of doing business in a corporate form. The principle concern of this paper, however, is to examine the tax consequences of transferring property to a corporation, whether such transfer is made at the time the corporation is organized or at some subsequent date.