Summary of The Simple Fix to the Problem of How to Tax Multinational Corporations – Ending Deferral

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The Simple Fix to the Problem of How to Tax Multinational Corporations – Ending Deferral summary
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8 Overall

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8 Innovation

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Recommendation

Efforts to balance budgets and bring government revenues and expenditures into equilibrium have largely focused on austerity measures. Though business leaders bemoan the sorry state of infrastructure and education in the United States, effective corporate tax rates are plummeting while corporate profits as a share of national income are growing rapidly. Economist Thomas L. Hungerford offers a bold idea to generate additional revenue and a broader tax base that will fund the services a healthy economy needs. getAbstract recommends this straightforward attempt at tackling one of the most manipulated aspects of US tax policy.

In this summary, you will learn

  • How the United States approaches taxing US-based multinationals’ foreign income;
  • Why tax deferral distorts and undermines US economic health; and
  • How best to restore balance, equity and efficiency to the corporate tax regime.
 

About the Author

Thomas L. Hungerford, director of tax and budget policy at the Economic Policy Institute, previously worked at the US General Accounting Office and the US Office of Management and Budget.

 

Summary

A “territorial system” of taxation assesses taxes only on earnings that a multinational generates within a country. A “worldwide system” taxes corporations on their global profits but also credits them for taxes paid in other jurisdictions, to avoid “double taxation.” While a territorial system provides...

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