Corporate taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform has become a major issue in the fiscal policy debate, with widespread disagreement over what impact various reform proposals would have on job growth in the U.S. One of the most discussed reforms – moving to a “territorial” system in which corporations are no longer double-taxed on profits earned abroad – has raised concerns that it would undermine domestic growth and employment. Real life evidence from Canada contradicts these worries, however, according to our newest analysis on international tax systems.
Figure 1: Despite concerns about a territorial system having a negative impact on employment, the Canadian example suggests otherwise.
The case study on Canada is the first in a five-part series on territorial tax systems. For a more in depth discussion, please see Tax Foundation Special Report No. 202, “A Global Perspective on Territorial Taxation.”
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