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The United Kingdom and Japan recently reformed their international tax systems to provide a permanent tax exemption for most foreign earnings of U.K. and Japanese companies. Now 26 of 34 OECD (Organization for Economic Cooperation and Development) countries employ a “territorial” tax system that does not tax the worldwide earnings of their global companies.

As many of the world’s major economies take steps to enhance the ability of their companies to grow and spur economic growth and job creation, proposed new U.S. international tax policies threaten to unfairly harm American companies and make U.S. workers less secure.

A major new tax hike on worldwide American companies – proposed by the Administration in its FY 2013 Budget – would repeal “deferral” for certain income derived from “intangible assets” used in overseas operations. Deferral was designed to provide a level playing field for U.S. companies competing with foreign-headquartered multinational companies in international markets.

The following resources support the findings and data described in other Business Roundtable fact sheets regarding deferral and other international tax issues.

February 24, 2012

Overseas operations by American companies expand the American economy by creating a demand for American products and services.

In a rare “controlled” experiment involving U.S. tax policy, the elimination of deferral for the American shipping industry provides clear evidence of the harm that can occur when U.S.-based international companies do not benefit from deferral. Fortunately, the recent reversal of the 1986 decision to eliminate deferral has initiated a rejuvenation of the American shipping industry and an increase in American shipping jobs.

Further limitations on deferral would endanger American jobs and lower American standard of living.

February 24, 2012

U.S. tax rules significantly affect the ability of American companies to compete in foreign markets. These rules include a provision known as “deferral,” which is a key pro-competitive international tax rule for American companies.

Global demand for American goods and services creates extraordinary opportunities for American companies and their employees, which benefits the U.S. economy and boosts American living standards. Foreign markets represent 95% of the world’s population and more than 80% of the world’s purchasing power. In many cases, in order to grow, American companies must expand in worldwide markets.

Strong worldwide operations create American jobs, boost workers’ wages, and raise America’s standard of living.

Leading Examples of Change: Deploying IT for Social Development focuses on five key areas of life in 21st century America: education, healthcare, personal finance, public administration, and entrepreneurship. Each of these areas is confronting new issues and fundamental challenges given the abundance of information and data in today’s world, the rapid pace of technological change, and an increasingly more integrated and global economy.

The following is model legislation – The Government Reorganization and Realignment Act – prepared by Business Roundtable to authorize a broader, more comprehensive reorganization of the federal government. Meaningful reorganization and realignment of federal agencies cannot be accomplished unless the Congress grants the President authority to consolidate and reorganize Executive Branch agencies.