Evaluating International Tax Reform‪.‬

INTRODUCTION Much of the current structure of U.S. taxation of foreign income dates to the early 1960s, and, remarkably, so too does much of current thinking on the desirability of taxing foreign income. The U.S. regime of taxing foreign subsidiaries of American multinational corporations was put in place in 1962, and despite numerous modifications in subsequent years, the system used by the United States to tax foreign income has been broadly unchanged since the early 1960s. American individuals and American corporations owe tax to the U.S. government on their worldwide incomes, but are entitled to claim credits for income taxes paid to foreign governments. Taxpayers are permitted to defer U.S. taxation of unrepatriated foreign income earned by separately-incorporated foreign subsidiaries, though this deferral is limited.