Revisiting Global Formulary Apportionment
Author | : Susan C. Morse |
Publisher | : |
Total Pages | : 0 |
Release | : 2012 |
ISBN-10 | : OCLC:1376395895 |
ISBN-13 | : |
Rating | : 4/5 (95 Downloads) |
Book excerpt: This Article examines global destination sales-based formulary apportionment (“DSFA”). It questions whether unilateral U.S. adoption of a DSFA tax would prompt other countries to follow suit, identifying on one hand factors that could encourage a productive capacity shift to the DSFA-adopting jurisdiction and on the other hand origin-based incentives such as business-to-business sales that could encourage the movement of capital investment to jurisdictions other than the adopting jurisdiction. It also analyzes several points of comparison between a globally adopted DSFA tax and the existing separate accounting corporate tax system. These include the potential of transfer pricing and other reform efforts to improve the current system baseline; the continued economic dislocation costs of origin-based and cross-border merger incentives under global DSFA; the costs of global negotiation, compliance and administration; and the limitations of a norm of international corporate taxation for the future evolution of the U.S. corporate income tax. As I plan to explore in future work, the uncertainty and inflexibility of outcomes resulting from broad global reform efforts suggests that incremental measures - which could include formulary and cooperative elements - may provide a better approach to international corporate income tax reform.