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Borderline Case International Tax Policy, Corporate Research and Development, and Investment (1997) / Chapter Skim
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4 INTERNATIONAL TAX POLICY, INVESTMENT, AND TECHNOLOGY
Pages 65-68

The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.


From page 65...
... If an individual borrows and invests in state and local bonds, the Internal Revenue Code may limit the amount of deductible interest expense. This is analogous to a company that borrows at home and invests abroad where the income might be deferred indefinitely or, in any case, be out of the home-country tax base because it is shielded by foreign tax credits.
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From page 66...
... Under the optional gross income method, the allocation to foreign income can be reduced to the greater of half of the sales allocation or the pure gross income allocation. Foreign gross income tends to be low relative to domestic gross income because it is made up largely of (repatriated)
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From page 67...
... Also, some of the income identified as foreign source actually arises from domestic operations. For example, 50 percent of export sales income can be classified as foreign source and absorb excess foreign tax credits generated by operations abroad.
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From page 68...
... The growth of the "virtual corporation," "flexible" work forces, and the importance of new attractive locations with low tax rates suggest that perhaps we were not far off the mark. Yet we should be clear that no inferences can be drawn from our results about the role of taxes in the choice between the United States and potential foreign locations.
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Key Terms

  • foreign tax
  • gross income
  • tax rate
  • tax rates
  • tax credits

  • income tax
  • optional gross
  • excess foreign
  • foreign locations
  • international tax

  • local tax
  • tax credit
  • effective tax
  • foreign affiliates
  • domestic gross

  • foreign business
  • income earned
  • investment location
  • reform act
  • net foreign

  • business income
  • potential foreign
  • overhead expenses
  • tax reform
  • income method

  • active foreign
  • domestic business
  • fixed geographical
  • credits generated
  • currently repatriated


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