Abstract
This Article examines the current system of taxation of income earned by U.S. residents (both corporations and individuals) in foreign countries. It finds that adopting a system where this income is exempt from U.S. income tax would increase economic efficiency. This occurs because an exemption system would undo distortions both in investment in new foreign activities by U.S.-based multinationals as well as in the market for the acquisition of foreign enterprises currently caused by the worldwide system. Furthermore, the Article discusses why an exemption system would not introduce any significant distortions that are not already present in the current system. It concludes by briefly discussing what features such an exemption system should have.
How to Cite
42 Ariz. L. Rev. 835 (2000)
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