Month: September 2011

“Under the [September 19 Obama Administration] proposal, if a U.S parent transfers an intangible to a controlled foreign corporation (CFC) in circumstances that demonstrate excessive income shifting from the United States, then an amount equal to the excessive return would be treated as subpart F income.  This would reduce the deficit by $19 billion over 10 years.”  http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf

Great.  But what is “excessive”?  How much income-shifting is OK?  This looks as vague as our old “commensurate with income” standard.  (I was always irritated when that standard was labeled “super-royalty.”  A salary commensurate with income is not a super-salary.)  Strike “excessive” and you’re getting somewhere.

Or “if a U.S parent shifts income from the United States by transferring an intangible to a controlled foreign corporation (CFC), then an amount equal to the income [from that intangible?] would be treated as subpart F income.”

Spinning the term of debate, advocates of this repatriation scheme are free to use the pleasant term “holiday.” Opponents might prefer “caper.”  More neutrally, it’s amnesty.

And instead of the vaguely patriotic “repatriation,” how about “de-havening”?

Advocates of a territorial system for international tax — where the USA would not tax any foreign income of U.S. corporations — say we should adopt it because the other major industrialized countries have it.

When it comes to a Value Added Tax, the fact that every other major industrialized country has one DOES NOT MATTER to those folks.

They are as consistent in their antipathy to taxation as I am in my sympathy for it.