BEYOND THE NUMBERS
Companies’ Proposals Won’t Fix the Broken Corporate Income Tax System
[A territorial system] would get rid of the incentive for multinationals to keep profits offshore, but it would increase their incentive to shift profits and investments overseas in the first place…
In case the territorial proposal fails, some multinationals also are calling for a “dividend repatriation tax holiday,” which would let them bring home their foreign profits and pay taxes on them at a much lower-than-usual tax rate. Congress’ tax scorekeeper estimates this would increase the deficit by tens of billions of dollars over 10 years. Worse, it would give multinationals an incentive to shift even more profits and investments offshore, in the hope that Congress would offer still another tax holiday at some point.Neither of these options would fix the problems that plague the corporate income tax system. Rather than spend time considering them, policymakers should instead focus on reducing the incentive to move profits and operations overseas. You can read my full column here and the pieces from the other Times’ contributors here.