Tax reform again

Douglas Holtz-Eakin has a nice pitch for a territorial tax system and related reforms supported by MWG.  The major point he adds it is so simple that even governments can figure it out.  The choice is that either you don’t have a territorial tax system and you keep massive amounts of investment outside the country or you have a territorial system where the funds are available for investment within the country.  Both systems produce no tax revenue from those earnings outside the country but one lets the money flow into the country.  Holtz Eakin estimates that the amount of earnings is $2 trillion.  Other countries recognize the wisdom of such a system and Holtz-Eakin shows that others have adopted it:

“While other countries have modernized their international tax systems, the United States remains mired in the past. The U.S. tax system isn’t working for American businesses, workers or the economy as a whole. All of the G-8 member nations except the United States, and 28 of the other 33 countries in the Organization for Economic Cooperation and Development, have moved to an international tax system with modern territorial features — meaning income is taxed only where it is earned. And the trend is clear: Fifteen of those 28 countries have done so since 2000. American workers are increasingly competing at a disadvantage.”
Read it all at:

It is easy for any country to do once you recognize that you are only giving up money that you are never going to get.  There are lots of other things to do but this is an easy start.


One thought on “Tax reform again

  1. Pingback: AEI Optimism | menwithgloves

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