Rehabilitating the U.S. Corporate Income Tax System in Light of Current Realities and 26 U.S.C. § 965

The U.S. corporate income tax system is outdated,¹ overly prescriptive,² and too complex and oppressive³ to respond efficiently and effectively to global business.⁴ As highlighted by 26 U.S.C. § 965, the international provisions are especially stale.⁵ Yet, multinational enterprise (MNE) income dominates the business environment,⁶ and cross border transactions are on the rise.⁷ I recommend placing global business concepts and the international tax code provisions at the center of restructured rules that include the following: new entity definitions and transaction/source rules that reflect evolving business realities; a strengthened worldwide system capable of encompassing border-defying income activity⁸; principles-based standards to remain dynamic and relevant, as well as to simplify the Internal Revenue Code and Treasury Regulations and to clarify congressional intent; ending deferral for U.S. foreign-source income; reducing the overall corporate income tax rate; and integrating the corporate and individual income tax systems according to the Comprehensive Business Income Tax (CBIT) prototype put forth by the U.S. Treasury Department.⁹