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Gift or Lump of Coal: U.S. Cross-border Tax Changes Won’t Be Home for Christmas

As 2021 comes to a close, countries are moving toward harmonizing tax rules for multinationals, but stalled talks on the Build Back Better Act (BBBA) in the United States means new uncertainties for a global agreement and for taxpayers. Despite the 2017 U.S. tax reform serving as inspiration for current discussions of a global minimum […]

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The Interest Limitation Pile-On

How should tax policy treat interest expenses? Historically, corporate income tax systems in the U.S. and around the world have allowed businesses to deduct their interest paid. As Congress contemplates adding a new worldwide interest limitation rule as part of the Build Back Better Act (BBBA), it is useful to consider the potential effects of […]

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Which Industries Would the Tax Hikes Target?

A recent Tax Foundation analysis considered how various proposals from the Biden administration, from Congress, and from the Organisation for Economic Co-operation and Development would affect the effective tax rates (ETRs) on the foreign profits of U.S. multinationals. That analysis focused on how each policy and proposal would affect the overall ETRs. But which industries […]

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How Heavily Taxed Are U.S. Multinationals?

Recent proposals from the Biden administration and congressional Democrats aim to hike taxes on the foreign profits of U.S. multinationals, resting on the claim that U.S. multinationals pay very low tax rates on these foreign profits. But how heavily taxed are they, and how would various proposals affect these tax rates? U.S. multinational enterprises (MNEs) […]

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Treasury Minimum Tax Argument Relies on Narrow Interpretation of Current/Proposed Rules

Tuesday, the U.S. Treasury Department released a blog authored by Treasury officials Itai Grinberg and Rebecca Kysar. Though the blog purports to make a case for President Biden’s proposal to increase the current minimum tax on foreign profits of U.S. companies, its arguments rely on a very narrow interpretation of current law and the president’s […]

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Tax Foundation Comments on the Wyden, Warner, Brown Discussion Draft

Introduction Tax Foundation welcomes the opportunity to offer comments on the Wyden, Warner, Brown discussion draft on international taxation. Tax Foundation is a nonprofit think tank based in Washington, D.C., and our mission is to improve lives through tax policies that lead to greater economic growth and opportunity. We use the four principles of simplicity, […]

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GILTI of Neglecting Losses

Sometimes the more you learn about a tax policy, the more it confuses you. Many times, the confusion lies between the intent of the policymakers and what really happens. Often, it’s when important issues were overlooked when the policy was being designed. Such is the case for U.S. companies that run losses on their domestic […]

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Expense Allocation: A Hidden Tax on Domestic Activities and Foreign Profits

The U.S. corporate tax code is a complicated behemoth, loaded with numerous arcane provisions—some of these providing special tax breaks, others imposing special tax penalties. Among the latter group, indirect expense allocation rules penalize domestic activities and impose a hidden surtax on foreign profits. While arcane, expense allocation rules are relevant to current debates because […]

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Adoption of Global Minimum Tax Could Raise U.S. Revenue…or Not

The Biden administration has proposed significant changes to the tax rules that govern how much U.S. companies owe on their foreign profits while working to negotiate a global minimum tax. However, the global minimum tax and the Biden administration’s proposals are quite different. A recent Tax Foundation report dug into the details on the revenue […]

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Options for Reforming the Taxation of U.S. Multinationals

Key Findings We analyze four options for changing the taxation of U.S. muiltinationals: the full Biden administration proposal raises the federal corporate income tax liabilities of U.S. multinationals by $1.37 trillion over a decade; a partial version raises $580 billion; making GILTI consistent with Pillar 2 raises $137 billion; and a revenue-neutral option to fix […]