US Senator Marco Rubio (R-Fla.), a likely 2016 Republican presidential candidate, and Senator Mike Lee (R-Utah) on March 4 released a tax plan that includes a proposal to adopt a territorial tax system.
A transition away from a worldwide tax system is needed to compete with multinational corporations headquartered in counties with a territorial system, and will lead to job creation and wage growth, Rubio and Lee say.
The Rubio-Lee plan adds “strong rules regarding profit shifting and realization of intangible and financial income to decrease base erosion and disingenuous tax reduction maneuvers.”
Also, to transition to a territorial system, the Senators call for a deemed repatriation of currently deferred taxes at a 6 percent tax rate, booked immediately, but payable over 10-years.
“The sum of this plan is the hope of triggering economic growth, because we believe economic growth is the first step in a multi-step process towards bringing America fully into the opportunities of the 21st century,” Rubio said.
See:
I’m not so smitten with territorial systems. This is clearly a thorny problem; but hard problems may have solutions that are not obvious on first blush. In a forthcoming study, I show how tax law, corporate governance, and securities regulation unwittingly conspire to help push US multinationals offshore, and what we might do about it. Spoiler: A territorial tax system (at least if implemented in isolation) would likely make things *worse*. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2511723