A Corporate Offshore Transitions Tax

BY Susan C. Morse

Congress might repeal the residual U.S. tax imposed when non-U.S. subsidiaries repatriate earnings to U.S. parent corporations. Repeal would raise the transition issue of how to tax the $1 trillion to $2 trillion of offshore earnings held by such non-U.S. subsidiaries. This Article proposes a 5–10% corporate offshore profits transition tax on non-U.S. subsidiaries’ untaxed earnings and profits, without downward adjustment for a foreign tax credit. It suggests using the financial accounting measure of unremitted earnings to help determine pre-1987 earnings and police aggressive efforts to reduce the earnings and profits base. The Article’s comprehensive policy analysis is based on the metrics of efficiency, administrability, and equity.

DOWNLOAD PDF | 91 N.C. L. Rev.549 (2013)