Tax Policy Blog

The Economics Behind Thin-Cap Rules

Are Opportunity Zones Working as Intended?

New Research Shows Small Firms Value Simplicity More Than Tax Relief

The Challenges of Consensus in the Digital Economy on the International Tax Treaty System

How Controlled Foreign Corporation Rules Look Around the World: United States of America

The United States was the first country to enact CFC rules, and it is probably the country with the most complex set of rules that will be presented in this blog series. The rules determine control using a combined ownership test: one for the corporation and the other at the shareholder level. The assessable income under the rules is generally passive income but the amount of foreign income subject to U.S. tax has expanded with the adoption of GILTI.

Millionaires’ Tax Take Two: Massachusetts legislature moves forward Millionaires’ Tax

Maine Hotels and Campgrounds Would Have Felt LOST If Bill Became Law

How Patent Boxes Impact Business Decisions

As with every change in tax policy, there are trade-offs. The Modified Nexus Approach adds an additional layer of complexity to the already complex issue of taxing IP income. Linking tax breaks for IP income to its associated R&D activity has changed the game and will likely result in some businesses restructuring and relocating their IP assets and R&D activity. Effective tax rates on IP income will likely play an important role in determining optimal locations, giving measures such as R&D credits more importance. Whether this new approach to IP taxation will impact profit shifting and which countries will be the winners and losers is yet to be seen.

CFC Rules Around the World

Our paper undertakes a review of controlled foreign corporation (CFC) rules around the world as a contribution to the global discussion over the possible expansion of existing anti-base erosion CFC regimes or the potential adoption of a minimum tax.

In Defense of the “Church Parking Tax”

Ripple Effects from Controlled Foreign Corporation Rules

Governments should recognize these trade-offs as they implement controlled foreign corporation (CFC) rules or change their tax policies in ways that increase taxes on foreign subsidiaries.

Simplifying Complex Income Tax Deduction Rules Would Benefit Short-Term Rental Arrangements

The Unintended Consequences of Senator Booker’s “Renters Credit”

Remembering Martin Feldstein

Italy Can Pay for a Flat Tax

Synopsis of New IRS Rules on SALT Deduction Cap Charitable Workaround

Minnesota Policymakers Strike Tax Conformity Deal

The Tax Proposal That Refuses to Die: New Jersey’s Millionaire’s Tax

Arizona Delivers Rate Cuts and Tax Conformity

Putting the Pieces Together on BEPS

Taxes matter for decisions to be made by businesses, individuals, and families, and it is important for policymakers to understand that rules can be designed to be neutral rather than distortionary.