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Fleming Peroni & Shay on Corporate Tax, Credits, and even Customary International Law

One of the many problems I have with the argument being made in this paper and in many other "US Authorized" papers is that modern CIT's in most industrialized countries including the US are laden with dozens of local host/source tax expenditures, credits, and deductions. Thus by not having either deferral or exemption the residence country is effective overriding the ability of its multinationals to obtain favorable source country tax treatment that in many cases was put into place democratically elected legislatures.

So while the Canadian Atlantic Investment Tax Credit, Canadian TV & Film Tax Credit, Canadian Atlantic provinces Investment Tax Credit might all be too generous I am not really sure it is the business of the US government or US academic tax law community(ala Avi-Yonah and RP&S) to be making pronouncements of the desirability of such policies enacted by democratically elected politicians as they apply to the arms length Canadian subsidiaries of US multinationals. Furthermore in the scenario of not having either deferral or exemption in all likelihood it would necessary inevitably to introduce some type of sparing credits to protect source country sovereignty which I can't imagine FP&S or anyone else in the world having much desire to go do the rabbit hole of sparing credits.

NOTE: I made a variation of this argument directly to Peroni who wasn't convinced or I wasn't convincing enough.

Published Jan 22, 2017 by Tim

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