Assessing U.S. Global Tax Competitiveness after Tax Reform

Andrew Lyon and William A. McBride

National Tax Journal, 2018, vol. 71, issue 4, 751-788

Abstract: This paper assesses the impacts of the 2017 tax reform act on U.S. competitiveness in terms of changes in incentives for U.S. domestic corporate investment and the taxation of U.S.-headquartered companies and their foreign subsidiaries relative to foreign-headquartered companies. The reduction of the U.S. statutory tax rate has significantly improved domestic investment incentives as measured by marginal and average effective tax rates, assuming an average use of debt and equity. In addition, the partial adoption of a participation exemption system in some cases can allow U.S. companies now to compete globally on equal tax terms with foreign-headquartered companies. However, a new U.S. global minimum tax imposes current taxation on certain foreign income previously eligible for deferral and, as a result, may disfavor U.S. ownership of high-return foreign assets relative to foreign-headquartered companies. Average effective tax rates are also reduced by a new domestic incentive for undertaking high-return investments in the United States. Even so, U.S. research incentives continue to lag behind those available in many other major countries, taking into account special deductions, tax credits, and patent box regimes.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.17310/ntj.2018.4.08 (text/html)
Access is restricted to subscribers and members of the National Tax Association.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:71:y:2018:i:4:p:751-788

Access Statistics for this article

National Tax Journal is currently edited by Stacy Dickert-Conlin and William M. Gentry

More articles in National Tax Journal from National Tax Association, National Tax Journal Contact information at EDIRC.
Bibliographic data for series maintained by The University of Chicago Press ().