Stateless Income and Its Remedies

Abstract

This outline presentation (I) quickly reviews the current status of business tax reform efforts in the United States, with particular attention to the international treatment of foreign direct investment, (II) summarizes the economic predicates required for territorial tax systems to advance economic efficiency, (III) explains why the phenomenon of stateless income means that those predicates are not met today, and are unlikely to be met in the future, and (IV) analyzes current U.S. legislative international tax proposals. In doing the last of these, the presentation points out how the legislative proposal advanced by Dave Camp, Chairman of the House Ways and Means Committee, might inadvertently operate to treat “good” operating income as subpart F income in a range of plausible cases.