Found 7 article(s) for author 'Stephen Shay'

Getting From Here to There: The Transition Tax Issue

Getting From Here to There: The Transition Tax Issue. Stephen Shay, March 27, 2017, Paper, “If there is fundamental U.S. international income tax reform, regardless of the reform option chosen, the United States must decide how to handle the $2.4 trillion to $2.6 trillion of previously untaxed foreign income accumulated by U.S. multinational corporations. In this report, Fleming, Peroni, and Shay argue that the proper approach is to treat the income as a subpart F inclusion in the year before the effective date of fundamental reform and to tax it at regular rates with an option to make the payments in installments that bear market-rate interest. The authors explain why the case for a low or deferred tax on this income is inferior to the case for full immediate taxation.Link

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Defending Worldwide Taxation with a Shareholder-Based Definition of Corporate Residence

Defending Worldwide Taxation with a Shareholder-Based Definition of Corporate Residence. Stephen Shay, March 5, 2017, Paper, “This Article argues that a principled, efficient, and practical definition of corporate residence is necessary even if some form of corporate integration is adopted, and that such a definition is a key element in designing either a real worldwide or a territorial income tax system as well as a potential restraint on the inversion phenomenon. The Article proposes that the United States adopt a shareholder-based definition of corporate residence that is structured as follows:…Link

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Two Cheers for the Foreign Tax Credit, Even in the BEPS Era

Two Cheers for the Foreign Tax Credit, Even in the BEPS Era. Stephen Shay, November November 2016, Paper, “Reform of the U.S. international income taxation system has been a hotly debated topic for many years. The principal competing alternatives are a territorial or exemption system and a worldwide system. For reasons summarized in this Article, we favor worldwide taxation if it is real worldwide taxation; that is, a non-deferred U.S. tax is imposed on all foreign income of U.S. residents at the time the income is earned. However, this approach is not acceptable unless the resulting double taxation is alleviated. The longstanding U.S. approach for handling the international double taxation problem is a foreign tax credit limited to the U.S. levy on the taxpayer’s foreign income.Link

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Treasury’s Unfinished Work on Corporate Expatriations

Treasury’s Unfinished Work on Corporate Expatriations. Stephen Shay, February 22, 2016, Paper. “Continued tax-motivated inversions of U.S. corporations into foreign corporations highlight the systemic tax advantages that a foreign-owned U.S. corporation has over a U.S.-owned corporation in avoiding U.S. corporate tax on U.S. business income. In the absence of congressional action, this article emphasizes the need for the Treasury to further reduce U.S. tax incentives for inversions and other foreign acquisitions of U.S. corporations. The two most important of the tax incentives are earnings stripping and the ability to use, directly or indirectly, a U.S. group’s unrepatriated foreign earnings for the benefit of shareholders of the foreign parent corporation without incurring current U.S. income tax. These tax advantages will not be meaningfully reduced by any plausible lowering of the top U.S. corporate tax rate. Moreover, earnings stripping would be exacerbated by adoption of a territorial system.Link

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Designing a 21st Century Corporate Tax — An Advance U.S. Minimum Tax on Foreign Income and Other Measures to Protect the Base

Designing a 21st Century Corporate Tax — An Advance U.S. Minimum Tax on Foreign Income and Other Measures to Protect the Base. Stephen Shay, July 31, 2015, Paper. “The 21st Century has seen unprecedented levels of corporate tax aggressiveness and avoidance. This article continues our exploration of second best international tax reforms that would protect the U.S. corporate tax base and have some likelihood of adoption. In this case, we consider how a U.S. minimum tax on foreign income earned by a controlled foreign corporation should be designed to protect the United States against erosion of its corporate income tax base and to combat tax competition by low-tax intermediary countries. In the authors’ view, a minimum tax should be an interim levy that preserves the residual U.S. tax on foreign income, as distinguished from a final minimum tax that partially eliminates the U.S. residual tax ….Link

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Lessons the United States Can Learn from Other Countries’ Territorial Systems for Taxing Income of Multinational Corporations

Lessons the United States Can Learn from Other Countries’ Territorial Systems for Taxing Income of Multinational Corporations. Stephen Shay, January 2015, Paper. “The United States has a worldwide system that taxes the dividends its resident multinational corporations receive from their foreign affiliates, while most other countries have territorial systems that exempt these dividends. This report examines the experience of four countries – two with long-standing territorial systems and two that have recently eliminated taxation of repatriated dividends. We find that the reasons for maintaining or introducing dividend exemption...” Link

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Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig?

Formulary Apportionment in the U.S. International Income Tax System: Putting Lipstick on a Pig? Stephen Shay, February 2014, Paper. “An affiliated corporate group consists of two or more corporations linked by sufficient stock ownership to cause them to function as an economic unit instead of as independent economic actors. Thus, an affiliated corporate group engaged in international business is often referred to as a multinational enterprise (MNE), a term that we will use throughout this Article. When corporate members of an MNE engage in transactions among themselves, the prices they employ (transfer prices) will…”  Link

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