The U.S. International Tax System
at a Crossroads
Barbara Angus, Tom Neubig, Eric
Solomon, and Mark Weinberger
U.S. International Tax System
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Current Situation
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Outdated
Too Complex
Ineffective in supporting the goals of the
government and businesses
System has been augmented, patched,
clarified and tweaked regardless of the longterm competitive effect and worldwide tax
policy trends
Consensus: Review and Modernization
of the U.S. International Tax Rules
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Reason: The business landscape in the
United Stated has transformed
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Increasingly global economy
New markets and industries have opened
Flow of capital has shifted
New economic powers have risen
As a result, the U.S. international tax system
has become obsolete and stands at a
crossroad
Proposed Changes
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2009:
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Curtail deferral of foreign earnings by denying
expense deductions on a current basis
Restrict the use of foreign tax credits to offset
U.S. tax on foreign earnings
Eliminate the check-the-box entity classification
rules in structuring foreign operations
2010:
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Tax treatment of transferred intangible property
Goals of Proposed Changes
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“Strike a Balance” - Make U.S. Businesses
more competitive globally and make America
a more attractive location for business
investment
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Limit the role taxes play in investment decisions
Reduce incentives to move jobs overseas
Eliminate loopholes that allow companies to avoid
paying taxes
What needs to be addressed?
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The discussion should encompass a global
view.
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How have the dynamics of the global economy
changed?
What role should other countries’ tax systems
play in determining international tax policy in the
United States?
What tax policies would best support the needs of
the U.S. Government and businesses in today’s
economy?
What needs to be addressed? Cont.
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What are the potential consequences of placing
additional tax burdens on foreign investments?
How do the U.S. Transfer pricing rules fit into the
U.S. tax system and integrate with the rules of
U.S. trading partners?
Focus
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Tax policy should foster a competitive global
environment and maintain a clear focus on
what is best for the U.S. economy and the
American people.
Conclusion
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Choosing the right path…
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International Cooperation
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“We can no longer meet the challenges of the 21st century
economy with 20th century approaches” – President Obama
Using international activity to your advantage
Planning for future growth of population and global
commerce
Ensure success through tax laws
What are the goals of the proposed changes
to the U.S. International tax policy?

The goal of the proposed tax changes to U.S. international tax
policy is to make U.S. businesses more competitive globally
and make America a more attractive location for business
investment by limiting the role taxes play in investment
decisions, reducing incentives to move jobs overseas, and to
eliminate loopholes that allow companies to avoid paying taxes.
A tax policy that fosters a competitive global environment and
maintains a clear focus on what is best for the U.S. economy
and the American people.