Federal Tax Treatment of Foreign Income

Federal Tax Treatment of Foreign Income

Federal Tax Treatment of Foreign Income

Federal Tax Treatment of Foreign Income

Excerpt

In the last few years, the taxation of income from foreign sources has become a controversial subject in the United States. The Revenue Act of 1962 dealt with some of the major issues, but did not completely resolve the controversy.

There are several reasons why further legislative action on taxing foreign income seems likely. Radically different approaches to the treatment of the foreign earnings of U. S. corporations and their affiliates have gained widespread support. The Kennedy Administration's 1961 proposals to restrict tax incentives for foreign investment represent one of these approaches. Others are indicated by the somewhat less restrictive, but very complicated, provisions that Congress enacted in 1962. And still others are illustrated by the Boggs Bill passed in 1960 by the House of Representatives in somewhat diluted form which would have increased, rather than decreased, incentives to export and to invest in foreign countries.

In its 1961 tax proposals, the Kennedy Administration stressed both equity and neutrality issues. That is, it not only sought legislation which would assure equal treatment of taxpayers who are similarly situated, it also had, as an objective, tax legislation that would be neutral in its effect on corporate investment plans and economic decision making generally.

In addition to these twin goals, the 1962 legislation explicitly attempted to improve the balance-of-payments position of the . . .

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