US Taxation of Foreign Income

Since 1992, new issues have arisen in international taxation―for example, taxation of electronic commerce, novel means of shielding passive income, the World Trade Organization (WTO) debate over the foreign sales corporation and subsequent passage of the American Jobs Creation Act of 2004, the problem of corporate inversions, and alleged "earnings stripping" by foreign-based multinational enterprises (MNEs) operating in the United States. In the meantime, US-based MNEs operating abroad have used a variety of methods to cut the effective US tax on repatriated foreign source income to around 2 percent. This revised study analyzes the impact of taxes on industry location and profit shifting using new panel econometric studies. It also discusses and evaluates new paradigms that have been suggested for the international tax system.

Gary Clyde Hufbauer, Reginald Jones Senior Fellow since 1992, was formerly the Maurice Greenberg Chair and Director of Studies at the Council on Foreign Relations (1996–98), the Marcus Wallenberg Professor of International Finance Diplomacy at Georgetown University (1985–92), senior fellow at the Institute (1981–85), deputy director of the International Law Institute at Georgetown University (1979–81); deputy assistant secretary for international trade and investment policy of the US Treasury (1977–79); and director of the international tax staff at the Treasury (1974–76).

Ariel Assa is a tax counsel for JP Morgan Chase & Co. in New York City. He was a tax attorney at the law firms of Willkie, Farr & Gallagher LLP in New York City (2003-07) and Herzog, Fox & Neeman in Tel Aviv (1999-2001). He also served as a tax agent in Israel's Income Tax Authority (1994-99) and an assistant professor in several tax courses at Tel Aviv University (1996-2001). He earned his law, accounting, and MBA degrees from Tel Aviv University and is a graduate of the LLM program in taxation at Georgetown University Law Center (2002).