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Sunday, May 25, 2008

Decennial Tax System Discussions

At least once every decade since at least the 1960s, there has been talk of serious tax reform in Congress. I came across a 1998 quote from then chair of the Senate Finance Committee, Senator Roth announcing his desire to review the international tax provisions in light of the current state of global markets. He stated: "We need to fundamentally rethink the tax code with a view to enhancing American competitiveness in the new global economy and helping the American workforce. In order to ensure that we enact policies that will lead the United States into the 21st Century at the forefront of competition, as Chairman of the Finance Committee, I intend to hold hearings over the coming year to explore the ramifications of the changing world economy and the needed reforms in both the international tax and trade areas. The cornerstones of these hearings will be ensuring economic growth in our domestic economy and competitiveness overseas. We must determine how our existing international tax regime, which was designed to address the needs of a totally different age, can be reengineered to complement the changing international marketplace and changing business profiles. We must also strive to encourage the creation of more jobs that draw on these new opportunities." [Source: "U.S. Finance Committee Chair Roth's Address at Forum on Taxation of Multinationals," 98 TNI 192-24, October 1, 1998.]

Wow! It sounds like this could have been said in 2008. The Senate Finance Committee held a hearing on 4/15/08 to get ready for tax reform discussions. Treasury held a conference and issued a background report on reform proposals in 2007. The Joint Committee on Taxation has issued reports on international tax issues and reforms in the past few years (2007 and 2006). In 2006, the House Ways and Means Committee held a hearing on international competitiveness and tax reform.

Other than repeal of FSC rules, not much has happened for fundamental international tax reform. Discussions on worldwide versus territorial taxation will continue, along with discussions on border-adjustable taxes, tax havens and more.

What do you think we'll be talking about in 2018?

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