A Proposal To Adopt Formulary Apportionment For Corporate Income Taxation: The Hamilton Project

REUVEN S. AVI-YONAH KIMBERLY A. CLAUSING I. Introduction[1] The current system of taxing the income of multinational firms in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex; observers are nearly unanimous in lamenting the heavy compliance…