Ways and Means Seeks Input on International Tax Reform Discussion Draft
House Ways and Means Committee Chairman Camp (R-MI) is requesting input on draft legislative language for international tax reform. On October 26, 2011, Camp released an international tax reform discussion draft as part of the Committee’s broader effort on comprehensive tax reform that would lower top tax rates for both individuals and employers to 25%. In addition to rate cuts, the plan would transition the U.S. from a worldwide system of taxation to a territorial system.
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Camp states that “if we are serious about creating a climate for job creation, now is the time to adopt tax policies that empower American companies to become more competitive and make the U.S. a more attractive place to invest and create the jobs this country needs.”
According to a Committee press release, the discussion draft would:
Reduce corporate tax rate - reduce the corporate tax rate to 25 percent, bringing it in line with the average of countries in the Organization for Economic Cooperation and Development (OECD).
Shift to territorial-based tax system - shift from a worldwide system of taxation to a territorial-based system. The new plan would:
- exempt 95% of overseas earnings from U.S. taxation when profits are brought back to the U.S. from a foreign subsidiary,
- include anti-abuse rules to ensure companies do not avoid paying their fair share of U.S. taxes,
- free up existing overseas earnings to be reinvested in the U.S. after they are taxed at a low rate in line with current repatriation proposals, and
- make U.S. companies more competitive on the global stage with little or no impact on the federal deficit.
Committee press release available here
Committee overview, with link to discussion draft, available here.