Research Report Is a Territorial Tax System Viable for the United States?
Eric Toder
Display Date
File
File
Download Report
(318.8 KB)

Territorial tax systems require clear rules to distinguish between taxable domestic and exempt foreign-source income. Defining the source of a multinational company’s profits is difficult, however, especially for profits that are attributable to intangible assets. Shifting of reported profits to low-tax countries with little economic activity is eroding territorial systems around the world. The OECD Base Erosion and Profit Shifting report would limit these abusive transactions, while attempting to maintain territorial systems that tax foreign affiliates of multinational companies as independent entities. Alternatives would abandon territorial systems altogether and seek different ways of taxing profits of multinational companies.
Research Areas Taxes and budgets
Tags Taxes and business Federal budget and economy Campaigns, proposals, and reforms Federal tax issues and reform proposals
Policy Centers Urban-Brookings Tax Policy Center