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Articles 31 - 60 of 80
Full-Text Articles in Taxation-Transnational
Should The Us Dictate World Tax Policy? Reflections On Ppl, Reuven S. Avi-Yonah
Should The Us Dictate World Tax Policy? Reflections On Ppl, Reuven S. Avi-Yonah
Articles
The U.S. Supreme Court’s decision to grant certiorari in PPL offers it a unique opportunity to change the law regarding foreign tax credits that has significantly impeded the ability of other countries to engage in meaningful tax reform. In 1938 the Court said in dicta that to qualify for the FTC a tax had to be an income or excess profits tax (or a tax imposed in lieu thereof) under U.S. tax principles. This statement has led to an elaborate set of regulations defining what is an income tax, which has significantly hampered the ability of foreign countries to adopt …
Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah
Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah
Articles
The passage of the American Taxpayer Relief Act of 2012 (ATRA) offers an opportune moment to consider proposals for corporate and international tax reform. With the debate over individual tax rates for the income and estate tax settled for the present, the President and Congress are free to consider broader reforms. Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the U.S. corporate tax rate is the highest in the Organisation for Economic Co-Operation and Development (OECD). Third, the current system raises relatively little revenue and large amounts of …
Tax Advice For The Second Obama Administration, Michael J. Graetz
Tax Advice For The Second Obama Administration, Michael J. Graetz
Faculty Scholarship
Delivered January 18, 2013 as the keynote address at a conference cosponsored by Pepperdine Law School and Tax Analysts.
Vive La Petite Difference: Camp, Obama, And Territoriality Reconsidered, Reuven S. Avi-Yonah
Vive La Petite Difference: Camp, Obama, And Territoriality Reconsidered, Reuven S. Avi-Yonah
Articles
The recent tax reform proposals by House Ways and Means Committee Chair David Camp, R-Mich., and by President Obama seem to offer starkly contrasting visions of how to reform the taxation of foreign-source income earned by U.S.-based multinational enterprises.1 Both acknowledge the problem, which is that U.S.-based MNEs currently have more than $1 trillion of ‘‘permanently reinvested’’ income offshore, which they cannot bring back to the U.S. without incurring a 35 percent tax penalty. However, they seem to offer radically different solutions: Under the Camp proposal, a participation exemption will enable U.S.-based MNEs to bring back the income without paying …
Symposium On International Taxation And Competitiveness: Introduction And Overview, Reuven S. Avi-Yonah, Nicola Sartori
Symposium On International Taxation And Competitiveness: Introduction And Overview, Reuven S. Avi-Yonah, Nicola Sartori
Articles
In February, 2012, the Treasury and White House unveiled President Obama's Framework for Business Tax Reform. A major proposal was to abolish the deferral on income earned by foreign subsidiaries of U.S. corporations ("CFCs").
Transfer Pricing Disputes In The United States, Reuven S. Avi-Yonah
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.
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. …
The Effective Tax Rate Of The Largest Us And Eu Multinationals, Reuven S. Avi-Yonah, Yaron Lahav
The Effective Tax Rate Of The Largest Us And Eu Multinationals, Reuven S. Avi-Yonah, Yaron Lahav
Articles
The United States has the second highest statutory corporate tax rate in the Organization for Economic Co-Operation and Development (OECD) (after Japan).1 This has not always been the case. After the Tax Reform Act of 1986 lowered the U.S. rate from 46% to 34%,2 the United States had one of the lowest statutory corporate tax rates in the OECD.3 In the past twenty-five years, however, the U.S. rate has remained essentially unchanged (it was raised to 35% in 1993),4 while most other OECD countries reduced their statutory rate so that the OECD average statutory corporate tax rate is 25.1%.
The Case Against Taxing Citizens, Reuven S. Avi-Yonah
The Case Against Taxing Citizens, Reuven S. Avi-Yonah
Articles
The bipartisan tax reform bill recently introduced by Sens. Ron Wyden, D-Ore., and Judd Gregg, R-N.H., proposes to abolish IRC section 911. That section, which exempts U.S. citizens living overseas from tax on the first $80,000 of earned income, is indeed anomalous in the context of a tax on all income "from whatever source derived," and has been subjected to criticism. However, there is a reason section 911 has been in the code since the 1920s: In its absence, citizenship-based taxation becomes completely unadministrable. Rather than continuing the long argument over section 911, Congress should therefore reexamine the basic premise: …
Treasure Islands, James R. Hines Jr.
Treasure Islands, James R. Hines Jr.
Articles
In movies and novels, tax havens are often settings for shady international deals; in practice, they are rather less flashy. Tax havens are countries and territories that offer low tax rates and favorable regulatory policies to foreign investors. For example, tax havens typically tax inbound investment at zero or very low rates and further encourage investment with telecommunications and transportation facilities, other business infrastructure, favorable legal environments, and limited bureaucratic hurdles to starting new firms. Tax havens are small: most are islands; all but a few have populations below one million; and they have above-average incomes. Tax havens are also …
Between Formulary Apportionment And The Oecd Guidelines: A Proposal For Reconciliation, Reuven S. Avi-Yonah
Between Formulary Apportionment And The Oecd Guidelines: A Proposal For Reconciliation, Reuven S. Avi-Yonah
Articles
In the last 30 years, a debate has been raging in international tax circles between advocates of the OECD Transfer Pricing Guidelines and the arm’s length standard (ALS) they embody, on the one hand, and advocates of formulary apportionment (FA) on the other. After the adoption of the 1995 regulations and the new OECD Guidelines, the debate became quieter for a while, because everyone was waiting to see whether the issue had been resolved. However, while there have been few decided cases, it is clear by now that the transfer pricing problem is as bad as it ever was. That …
International Capital Taxation., Rachel Griffith, James R. Hines Jr., Peter Birch Sørensen
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 …
Obama's International Tax Plan: A Major Step Forward, Reuven S. Avi-Yonah
Obama's International Tax Plan: A Major Step Forward, Reuven S. Avi-Yonah
Articles
President Barack Obama last week personally introduced a set of proposals to reform U.S. international taxation that are the most significant advance toward preserving the income tax on cross-border transactions since the enactment of the subpart F rules by the Kennedy administration in 1962. (For prior coverage, see Doc 2009-10047 or 2009 TNT 84-1.) In essence, the Obama proposals introduce a 21stcentury version of the vision begun by Thomas Adams in 1918 and continued by Stanley Surrey in 1961: a world in which source and residence taxation are coordinated so as to achieve the underlying goals of the international tax …
The Oecd Harmful Tax Competition Report: A Tenth Anniversary Retrospective, Reuven S. Avi-Yonah
The Oecd Harmful Tax Competition Report: A Tenth Anniversary Retrospective, Reuven S. Avi-Yonah
Articles
Eleven years ago the Organisation for Economic Co-operation and Development published its report "Harmful Tax Competition: An Emerging Global Issue." The Report identified for the first time two problem areas facing international income taxation of geographically mobile activities: tax havens and harmful preferential tax regimes. It sought to initiate activities to eliminate both types of problems.
Closing The International Tax Gap Via Cooperations, Not Competition, Reuven S. Avi-Yonah
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.
Protectionist Pitfalls In U.S. Tax Reform, James R. Hines Jr.
Protectionist Pitfalls In U.S. Tax Reform, James R. Hines Jr.
Book Chapters
The magnitude of current and projected U.S. budget deficits makes it appropriate for the government to cast its net wide in seeking new revenue sources. In doing so, however, there is the danger of misconstruing the role of domestic taxation in a global economy, and thereby designing a tax reform proposal with significant protectionist elements.
How Globalization Affects Tax Design, James R. Hines Jr., Lawrence H. Summers
How Globalization Affects Tax Design, James R. Hines Jr., Lawrence H. Summers
Articles
The economic changes associated with globalization tighten financial pressures on governments of high-income countries by increasing the demand for government spending while making it more costly to raise tax revenue. Greater international mobility of economic activity, and associated responsiveness of the tax base to tax rates, increases the economic distortions created by taxation. Countries with small open economies have relatively mobile tax bases; as a result, they rely much less heavily on corporate and personal income taxes than do other countries. The evidence indicates that a ten percent smaller population in 1999 is associated with a one percent smaller ratio …
Reconsidering The Taxation Of Foreign Income, James R. Hines Jr.
Reconsidering The Taxation Of Foreign Income, James R. Hines Jr.
Articles
The purpose of this Article is to analyze the consequences of taxing active foreign business income,1 and in particular, to compare a regime in which a home country taxes foreign income to a regime in which it does not. In practice, countries typically do not adopt such extreme policy positions. For example, a country such as France, which largely exempts foreign business income from taxation, nevertheless taxes small pieces of foreign income;2 and a country such as the United States, which attempts to tax the foreign incomes of U.S. corporations, permits taxpayers to defer home country taxation in some circumstances, …
Double Tax Treaties: An Introduction, Reuven S. Avi-Yonah
Double Tax Treaties: An Introduction, Reuven S. Avi-Yonah
Book Chapters
The existing network of more than 2,500 bilateral double tax treaties (DTTs) represents an important part of international law. The current DTTs are all based on two models, the Organisation for Economic Co-operation and Development (OECD) and United Nations (UN) model DTTs, which in turn are based on models developed by the League of Nations between 1927 and 1946. Despite some differences that will be discussed below, all DTTs are remarkably similar in the topics covered (even the order of articles are always the same) and in their language. About 75% of the actual words of any given DTT are …
Allocating Business Profits For Tax Purposes: A Proposal To Adopt A Formulary Profit Split, Reuven S. Avi-Yonah, Kimberly A. Clausing, Michael C. Durst
Allocating Business Profits For Tax Purposes: A Proposal To Adopt A Formulary Profit Split, Reuven S. Avi-Yonah, Kimberly A. Clausing, Michael C. Durst
Articles
The current system of taxing the income of multinational firms in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex; observers are nearly unanimous in lamenting the heavy compliance burdens and the impracticality of coherent enforcement. Further, despite a corporate tax rate one standard deviation above that of other OECD countries, the U.S. corporate tax system raises relatively little revenue, due in part to the shifting of …
A Coordinated Withholding Tax On Deductibility Payments, Reuven S. Avi-Yonah
A Coordinated Withholding Tax On Deductibility Payments, Reuven S. Avi-Yonah
Articles
Prof. Avi-Yonah proposes a 35 percent withholding tax on deductible payments made to a non-U.S. resident, in coordination with other OECD members. The tax is aimed at U.S. residents posing as foreign investors and would be refundable when the beneficial owner shows that the payments have been reported to tax authorities in the owner’s country of residence.
Foreign Income And Domestic Deductions, James R. Hines Jr.
Foreign Income And Domestic Deductions, James R. Hines Jr.
Articles
To what extent should taxpayers deduct expenses incurred domestically that contribute to foreign income production? It is widely believed that if the home country does not tax foreign income, then it also should not permit deductions for that portion of domestic expenses attributable to earning foreign income. This prescription is, however, inconsistent with the decision to exempt foreign income from taxation in the first place. The paper shows that, for any system of taxing foreign income, the consistent and efficient treatment is to permit domestic expense deductions for all expenses incurred domestically. This differs from the current U.S. regime, under …
Dividend Policy Inside The Multinational Firm, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.
Dividend Policy Inside The Multinational Firm, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.
Articles
This paper examines the determinants of profit repatriation policies for US multinational firms. Dividend repatriations are surprisingly persistent and resemble dividend payments to external shareholders. Tax considerations influence dividend repatriations, but not decisively, as differentially-taxed entities feature similar policies and some firms incur avoidable tax penalties. Parent companies requiring cash to fund domestic investments, or to pay dividends to common shareholders, draw on the resources of their foreign affiliates through repatriations. Incompletely controlled affiliates are more likely than others to make regular dividend payments and to trigger avoidable tax costs through repatriations. The results indicate that traditional corporate finance concerns …
Corporate Taxation And International Competition, James R. Hines Jr.
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
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 …
Federalism And The Commerce Clause: A Comparative Perspective, Reuven S. Avi-Yonah
Federalism And The Commerce Clause: A Comparative Perspective, Reuven S. Avi-Yonah
Articles
The U.S. Supreme Court has on numerous occasions addressed the constitutionality of state taxes under the U.S. Constitution (most often under the Commerce Clause, but sometimes under the Equal Protection and Due Process Clauses). In general, the Supreme Court has granted wide leeway to the states to adopt any tax system they wish, only striking down the most egregious cases of discrimination against out-of-state residents. Thus, for example, the Court has generally refused to intervene against state tax competition to attract business into the state. It has twice upheld a method of calculating how much income of a multinational enterprise …
Taxation In Developing Countries: Some Recent Support And Challenges To The Conventional View, Reuven S. Avi-Yonah, Yoram Margolioth
Taxation In Developing Countries: Some Recent Support And Challenges To The Conventional View, Reuven S. Avi-Yonah, Yoram Margolioth
Articles
The general advice given by international institutions such as the International Monetary Fund (IMF) and the World Bank to developing countries over the past few decades has been to replace trade taxes with domestic consumption taxes, particularly value-added taxes (VAT), and to maintain relatively high corporate income tax rates. This article reviews recent literature that supports and challenges this conventional view.
The New United States Model Income Tax Convention, Reuven S. Avi-Yonah, Martin B. Tittle
The New United States Model Income Tax Convention, Reuven S. Avi-Yonah, Martin B. Tittle
Articles
On 15 November 2006, the United States Treasury released its long-awaited new Model Income Tax Convention (“New Model”), which replaced the 1996 US Model (“Old Model”). This article reviews some of the major differences between the New and Old Models, as well as some of the major differences between the New Model and the current (2005) OECD Model Tax Convention. The article also discusses some new trends in US treaty policy which are not reflected in the New Model. The article concludes by evaluating the New Model in light of the emerging trend to use tax treaties not just to …
Comparative Fiscal Federalism: What Can The U.S. Supreme Court And The European Court Of Justice Learn From Each Other's Tax Jurisprudence?, Reuven S. Avi-Yonah
Comparative Fiscal Federalism: What Can The U.S. Supreme Court And The European Court Of Justice Learn From Each Other's Tax Jurisprudence?, Reuven S. Avi-Yonah
Articles
Last October, a group of distinguished tax experts from the European Union and the United States convened at the University of Michigan Law School for a conference on "Comparative Fiscal Federalism: Comparing the U.S. Supreme Court and European Court of Justice Tax Jurisprudence." The conference was sponsored by the Law School, the European Union Center, and Harvard Law School's Fund for Tax and Fiscal Research. Attendees from Europe included Michel Aujean, the principal tax official at the EU Commission, Servaas van Thie1, chief tax advisor to the EU Council, Michael Lang (Vienna) and Kees van Raad (Leiden), who run the …
The Three Goals Of Taxation, Reuven S. Avi-Yonah
The Three Goals Of Taxation, Reuven S. Avi-Yonah
Articles
The current debate in the United States about whether the income tax should be replaced with a consumption tax has been waged on the traditional grounds for evaluating tax policy: efficiency, equity, and administrability. For example, Joseph Bankman and David Weisbach recently argued for the superiority of an ideal consumption tax over an ideal income tax on three grounds: First, that the consumption tax is more efficient because it does not discriminate between current and future consumption,' while both income and consumption taxes have identical effect on work effort. Second, that the consumption tax is at least as good at …