Leaders from the U.S. House of Representatives Ways and Means Committee and the U.S. Senate Finance Committee are increasingly writing about the importance of international tax reform to protecting U.S. jobs and bolstering the nation’s economy. And there’s a growing consensus among the business community and Congress that this reform can’t wait any longer. Recently, Senators Chuck Schumer (D-NY) and Rob Portman (R-OH) have drafted a bipartisan framework—one that we think is jumpstarting the reform process.
Issue: Appropriate discounted repatriation rate, foreign tax credit treatment, and what is covered.
Innovation box regime. This would provide a substantially lower tax rate for intellectual property (IP). Legislation drafted by House Ways and Means Committee Members Charles Boustany (R-LA) and Richard Neal (D-MA) suggests a tax rate of 10% for IP as opposed to the 35% general corporate rate.
Issue: Given upcoming changes to OECD tax rules, without the innovation box, there will be greater pressures for U.S. companies to move R&D to countries with more favorable tax regimes, potentially costing jobs and U.S. innovation advantage.
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