Challenging the Status Quo: The Case for Combined Reporting In Preventing the Shift of Trillions of Dollars to Offshore Tax Havens

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

Michael J. McIntyre, senior advisor to the Tax Justice Network, criticizes the arm's-length method used to determine tax on cross-border transactions among related entities for having encouraged the substantial shift of income to offshore tax havens. In responding to a recent article supporting the arm's-length method over combined reporting with formulary apportionment, Professor McIntyre finds the article unpersuasive in fact and analysis and argues that combined reporting is preferable as demonstrated by U.S. state tax experience, and properly apportions taxability to the country in which meaningful economic activity has occurred.