It is “imperative” that the US change its international tax system to a dividend exemption regime coupled with “robust and appropriate” base erosion rules, concluded the co-chairs of a US Senate bipartisan working group in a July 8 report.
Senator Rob Portman (R-Ohio) and Senator Chuck Schumer (D-NY) said in the report that a pivot to a territorial tax system is necessary to keep the US economy globally competitive. The lawmakers also said the US should adopt an innovation box regime to compete with foreign countries for highly mobile US corporate income.
The report was prepared by a bipartisan a working group tasked by US Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) to review the US international tax system and suggest tax reform.
Conclusions could not be reached regarding whether the US should adopt a minimum tax or the structure interest deduction limitations.
In response to a request for stakeholder input, the working group received numerous requests from US citizens living abroad for a move to residence-based taxation. The working group co-chairs said they were unable to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on them, though.
The report was one of five reports prepared to develop US tax reform options. The other tax working group reports focused on individual income tax, business income tax, savings and investment, and community development and infrastructure.
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