11 Fla. Tax Rev. 699 (2011)
Stateless Income

handle is hein.journals/ftaxr11 and id is 561 raw text is: FLORIDA TAX REVIEW
Volume 11                         2011                          Number 9
STATELESS INCOME
by
Edward D. Kleinbard*
ABSTRACT...............           ............................... .......700
I. INTRODUCTION          ........................................ ........ 701
A. Stateless Income..    .................................701
B. An Illustrative Example: The Double Irish Dutch Sandwich.....706
C. Overview and Conclusions ofArticle   .............     .....713
IIi. THE CURRENT U.S. TAX SYSTEM IS AN ERSATZ TERRITORIAL
REGIME.........................................................715
A. Worldwide and Territorial Tax Paradigms ........       .......715
B. The Current U.S. Tax System   ........................717
C. Revenue Collections Under the Current System .....      ......722
D. Arbitrage and Domestic Base Erosion              .................724
E. The Tax Distillery      .........................       ......725
m. STATELESS INCOME IN OPERATION ...................727
A. The Value of Stateless Income Tax Planning...........................727
B. Mechanics of Stateless Income Tax Planning..........................728
1. Business Earnings Stripping  ........................728
2. Transfer Pricing    ...........................733
3. Legal System Arbitrage ......................737
C. How Large is Stateless Income? .....................737
1. Cash Tax Liabilities   ...................   ..... 737
2. Accounting Evidence    ................................744
* Professor of Law, University of Southern California Gould School of
Law. I thank William Kessler, Yungsheng Wang and Douglas Wicks for their
research assistance in the preparation of earlier versions of this article. Helpful
comments on this article were received from Rosanne Altshuler, Joseph Bankman,
Tim Edgar, Edward McCaffery, Martin J. McMahon, Jr., Michael Knoll, Patrick
Oglesby and Daniel Shaviro, as well as participants in presentations at the University
of Florida Levin College of Law, the University of Southern California Gould
School of Law, Stanford Law School, and the University of Pennsylvania Law
School. The author is solely responsible for all errors of fact, law or economic
theory.
699

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