Document Type
Article
Publication Date
2010
Abstract
Hit hard by the financial crisis and recession, U.S. auto producers are seeking a massive bailout from the U.S. Congress. Many reasons are given for the U.S. auto industry’s lack of competitiveness including the U.S. corporate income tax. Although it is regularly asserted that there is a direct connection between the corporate income tax and competitiveness, what that connection is has not been carefully spelled out. In this essay, I describe how the corporate income tax directly harms the competitiveness of U.S. industries. I show that the mechanism differs depending upon whether the U.S. industry is defined as the global production of U.S.-based corporations or as all productive activities undertaken in the United States regardless of where the corporations undertaking those activities are based. I also examine the impact on competitiveness of various possible replacements for the corporate income tax, including a value added tax (VAT), formulary apportionment, a cost of capital allowance (COCA), and preset “in lieu of tax” payments.
Keywords
foreign direct investment, international taxation, tax competition, capital export neutrality (CEN), capital import neutrality (CIN), capital ownership neutrality (CON), automobiles, bailout, credit crunch, value added tax, formulary apportionment, and cost of capital allowance (COCA)
Publication Title
Tax Law Review
Repository Citation
Knoll, Michael S., "The Corporate Income Tax and the Competitiveness of U.S. Industries" (2010). All Faculty Scholarship. 248.
https://scholarship.law.upenn.edu/faculty_scholarship/248
Included in
International Economics Commons, International Trade Law Commons, Law and Economics Commons, Taxation Commons, Taxation-Federal Commons
Publication Citation
63 Tax L. Rev. 771 (2010).