Ask The Expert: Territorial or Worldwide Tax System?
In 28 of the 34 OECD countries, corporate earnings are only taxed in the nation where they are earned (a territorial tax system). But under U.S. law, a company must pay taxes in the country where income is earned and again when those earnings are brought back to the U.S. (a worldwide tax system). This has led to many companies keeping their earnings overseas to avoid this double taxation.
Free Enterprise Facebook fan Ray Pinard asked us about the potential economic impact on GDP if the U.S. were to allow annual, tax-free repatriation of foreign earnings. Marty Regalia, U.S. Chamber of Commerce Senior Vice President of Economic Policy and Chief Economist, provides a videotaped response below.
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