Rethinking Foreign Tax CreditabilityNew York University Law and Economics Working Papers
AbstractInternational tax policy experts often mistakenly conflate two distinct margins: (1) the overall tax burden on outbound investment, and (2) the marginal reimbursement rate (MRR) for foreign taxes paid, which is 100 percent under a foreign tax credit system, but equals the marginal tax rate for foreign source income under an explicit or implicit deductibility system (such as exemption). From a unilateral national welfare standpoint, whatever the right answer at margin (1), deductibility is clearly optimal, and creditability dangerously over-generous, at margin (2).
Date of Authorship for this Version9-1-2010
Citation InformationDaniel N Shaviro. "Rethinking Foreign Tax Creditability" (2010)
Available at: http://works.bepress.com/daniel_shaviro/28/