Campus Only Senior Thesis
Bachelor of Arts
James D. Taylor
© 2012 Robert L. Daily
The current United States tax code regarding foreign sourced income is outdated for a heavily globalized and interconnected world. Multinationals have played certain games with the tax code to lower their domestic and foreign tax bill. This form of tax avoidance has real economic effects that are leading to non-optimal economic outcomes. This paper will begin by offering examples of how multinationals are avoiding taxes, especially in the pricing of intangible assets. Other countries have adopted different ways to tax foreign profits; notably most countries either have a worldwide non-deferral tax system or a territorial tax system. There are costs and benefits associated with both systems of taxation that must be considered before adoption. Ultimately, this paper will conclude that a territorial tax system combined with an overhaul of the current rules regarding transfer pricing will lead to a better economic outcome than the current U.S. system of taxation.
Daily, Robert L., "Avoiding Taxes On Foreign Profits: How To Fix the Games That Multinationals Play." (2012). CMC Senior Theses. 517.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.