Corporate Tax Reform
The signators to this statement advocate a pragmatic approach to corporate tax reform that retains the U.S. worldwide tax system over its territorial alternative as transfer pricing issues are easier to deal with in the worldwide system than in a territorial system. As long as the U.S. tax rate remains higher than rates abroad, attempts to shift profits to low-tax jurisdictions are not beneficial because, in its worldwide system, the U.S. imposes taxes on the difference between those low rates and the U.S. rate. Congress can strengthen the corporate tax system by removing the deferral option with respect to off-shore profits while lowering tax rates. Following this tax reform, the existing deferred balances then could be addressed. A schedule of repatriation could be imposed, possibly with an inducement of one-time lower rates.
