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1 Cody Kallen, Options for Reforming the Taxation of U.S. Multinationals 1 (2021)

handle is hein.taxfoundation/osfrrgtetxn0001 and id is 1 raw text is: Options for Reforming
*                           the Taxation of U.S. Multinationals
FI SCAL                     Cody Kallen  Resident Fellow
No. 776
Aug. 2021                   Key Findings
 We analyze four options for changing the taxation of U.S. muiltinationals:
the full Biden administration proposal raises the federal corporate income
tax liabilities of U.S. multinationals by $1.32 trillion over a decade; a partial
version raises $580 billion; making GILTI consistent with Pillar 2 raises $106
billion; and a revenue-neutral option to fix unintended issues with GILTI.
 All four of these options would raise taxes on the foreign activities of U.S.
 The effect of the Biden administration's proposals would be the most
extreme, imposing a 7.8 percent surtax on the foreign profits of U.S.
multinationals in addition to an average foreign tax rate of 12.5 percent,
resulting in a combined tax rate of 20.3 percent. This would be significantly
higher than combined tax rates under current law (15.3 percent) and under
the other proposals (16.3-17.6 percent).
 Both the full and partial versions of the Biden administration's proposals
would increase profits shifted out of the U.S. on net. Making GILTI resemble
Pillar 2 would have smaller effects on profit shifting.
 Other countries raising their effective tax rates to 15 percent in response to
the OECD's proposed minimum tax would substantially reduce U.S. corporate
tax revenues under all these proposals, but much less under current law.
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©2021 Tax Foundation
Distributed under
Creative Commons CC-BY-NC 4.0
Editor, Rachel Shuster      Correction (8/25/2021): Due to an minor error in our Multinational Tax Model, several
Designer, Dan Carvajal
Tax Foundation              of the calculations in the orginal version of this study were incorrect. That error has now
1325 G Street, NW, Suite 950  been corrected and this paper has been updated accordingly.
Washington, DC 20005

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