Issues in the Taxation of Foreign Source Income / Daniel J. Frisch.

By:

Frisch, Daniel J

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w0798.Publication details: Cambridge, Mass. National Bureau of Economic Research 1981.Description: 1 online resource: illustrations (black and white)Online resources:

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Abstract: This paper examines some aspects of the tax treatment of U.S. multinational corporations. The emphasis is on problems of coordination of the different tax systems faced by the firms. The U.S. corporate income tax must take account of the fact that the firms' over- seas income is taxed by the host governments, in a variety of ways. Currently, the foreign tax credit is the principle mechanism for making these adjustments; it is examined, along with alternative methods such as territorial treatment and a deduction for foreign taxes. The paper also considers the closely related question of coordinating measures of taxable income. The most common method, the arm's length rule, is examined. Alternatives to it, including allocation by shares and a partial case involving allocation of research and development expenses, are also considered. First, the revenue effects of these tax regimes are simulated, with no behavioral responses considered. Responses in location of investment decisions are then included. The data are taken from the corporations' U.S. tax returns, cross-tabulated into approximately 240 industry and country cells.

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Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w0798 (Browse shelf(Opens below))	Not For Loan

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November 1981.

This paper examines some aspects of the tax treatment of U.S. multinational corporations. The emphasis is on problems of coordination of the different tax systems faced by the firms. The U.S. corporate income tax must take account of the fact that the firms' over- seas income is taxed by the host governments, in a variety of ways. Currently, the foreign tax credit is the principle mechanism for making these adjustments; it is examined, along with alternative methods such as territorial treatment and a deduction for foreign taxes. The paper also considers the closely related question of coordinating measures of taxable income. The most common method, the arm's length rule, is examined. Alternatives to it, including allocation by shares and a partial case involving allocation of research and development expenses, are also considered. First, the revenue effects of these tax regimes are simulated, with no behavioral responses considered. Responses in location of investment decisions are then included. The data are taken from the corporations' U.S. tax returns, cross-tabulated into approximately 240 industry and country cells.