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    US Supreme Court unanimously chooses substance over form in foreign tax credit case: implications of the PPL decision for the creditability of cash-flow taxes

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    Author
    McLure, Charles E. Jr.; Mintz, Jack; Zodrow, George R.
    Date
    2015
    Abstract
    In a recent unanimous decision in the PPL case, the US Supreme Court ruled that a one-time retroactive British “Windfall Tax” levied on 32 public utilities that were privatized between 1984 and 1996 was eligible for the US foreign tax credit (FTC). The Court rejected the contention of the US Internal Revenue Service that eligibility for the FTC should be governed by the legislative form of the tax rather than its economic substance. This decision could have far-reaching implications for the creditability of taxes that are not ordinarily thought to be income taxes, including various cash-flow business taxes that are key elements of several proposals recommending replacement of the income tax with a consumption-based tax. This article examines these issues, arguing that one and arguably both of the most common forms of cash-flow consumption-based taxes should be creditable; it also discusses questions that remain about the interpretation of key regulatory requirements that govern creditability.
    Citation
    McLure, Charles E. Jr., Mintz, Jack and Zodrow, George R.. "US Supreme Court unanimously chooses substance over form in foreign tax credit case: implications of the PPL decision for the creditability of cash-flow taxes." International Tax and Public Finance, 22, no. 5 (2015) Springer: 887-907. http://dx.doi.org/10.1007/s10797-014-9336-x.
    Published Version
    http://dx.doi.org/10.1007/s10797-014-9336-x
    Keyword
    US Supreme Court PPL decision; windfall profits tax; foreign tax credit; cash flow tax; rent tax
    Type
    Journal article
    Publisher
    Springer
    Citable link to this page
    https://hdl.handle.net/1911/91689
    Link to related resources
    http://www.bakerinstitute.org/research/us-supreme-court-unanimously-chooses-substance-over-form-foreign-tax-credit-case-implications-ppl-de/
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    Managed by the Digital Scholarship Services at Fondren Library, Rice University
    Physical Address: 6100 Main Street, Houston, Texas 77005
    Mailing Address: MS-44, P.O.BOX 1892, Houston, Texas 77251-1892
    Site Map