Tax experts will argue about nearly anything. But on one issue, there is something approaching a consensus: Corporate tax rates in the U.S. are too high. Where all that harmony turns dissonant, however, is over the matter of what to do about it. Cutting the corporate rate, it turns out, raises all sorts of complex technical problems, to say nothing of being a political nightmare.    more »

President Obama took aim at multinational corporations last May at a press conference on international tax policy. I’ll leave out the details here, lest I put you to sleep or explode your brain. Let’s just say that the current system is a mess that drastically needs fundamental reform. Economists describe two contrasting “pure” approaches to taxing the income U.S. companies earn abroad. A “worldwide” approach would apply our domestic tax rules to all income (with a foreign tax credit to protect against double-taxation). In theory, that system would tax U.S. business income the same, whether it’s earned at home or overseas, so firms shouldn’t care where they invest. In contrast, under a “territorial” or “dividend exemption” system, the U.S. wouldn’t tax active business income earned overseas; American firms would pay only the taxes of the country where they earn income, just like any non-U.S. business operating there. In theory, that puts U.S. businesses that invest abroad on equal tax footing with foreign firms.    more »

International tax gives me a migraine, but President Obama’s new effort to tax overseas income has the wonkosphere buzzing, so I can’t resist adding to the cacophony. First, some of what Obama is proposing will be very useful. Some may be counterproductive. But whatever it is, it is not tax reform. I wish Obama would stop degrading the concept of reform by using the phrase to describe what is mostly a tax increase on multinational businesses. Tax reform implies a coherent structure for raising revenue. This is a complex package of international tax changes, but I don't see the all-important internal logic that makes it reform.    more »