Introduction to The Effects of Taxation on Multinational Corporations
The growing worldwide importance of international business activities has in recent years lead to serious reexaminations of the ways that governments tax multinational corporations. In the United States, much of the debate concerns the competitive positions of U.S. firms in international product and capital markets. In addition, there are those who agree that U.S. international tax rules have become more complex and more distorting in recent years, particularly since the passage of the Tax Reform Act of 1986. Discussions in the U.S. Congress and the administration since 1992 reveal a willingness to consider significant reforms. In Europe, increased liberalization of capital markets prompted discussions by the European Commission of harmonization of corporate taxation. These policy developments around the world not only suggest dissatisfaction with certain features of modem tax practice, but also raise deeper questions of whether current systems of taxing international income are viable in a world of significant capital-market integration and global commercial competition.