What Republicans want in new US tax system
01 November 2011
Ralph Cunningham - ITR
US corporations are fully behind the principles in a discussion draft from members of the House Ways and Means Committee on moving to a territorial tax system, if early reaction is a good guide.
Dave Camp, the Republican chairman of the Committee, unveiled the document, which represents the thoughts of his party members on the Committee, on October 25, asking for public comments on the plan.
The Republicans propose to:
Cut the corporate tax rate by 10 percentage points to 25%;
Provide a deduction equal to 95% of foreign-source dividends received by a 10% US corporate shareholder from a controlled foreign corporation (CFC);
Treat as a CFC a foreign corporation with a 10% US corporate shareholder (a so-called 10/50 company) if the US company decided to treat all of its 10/50 companies as CFCs to avail of the 95% deduction;
Use the subpart F rules to treat certain types of passive and highly mobile income as part of the US parent’s taxable income, whether or not repatriated, and allow foreign tax credits for this type of income;
Allow companies to apply a 5.25%...
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