International Tax Policy's Harm to Manufacturing and National Interests

Against the background of existing US international tax rules on the operation of Controlled Foreign Corporations, Prof Repetti considers two tax regulations which in his view have created significant tax incentives for MNEs to move manufacturing outside the U.S. Prof. Repetti argues that the CTB regulations and the Subpart F manufacturing exception have contributed to the loss of 5 million manufacturing jobs, the closure of more than 91,000 plants since 1997 and posits that the job losses increased racial and economic inequality and stressed our political system. He makes a case for the amendment of the regulations to reduce or eliminate the tax incentives for offshoring by preventing the use of foreign contract manufacturers and disallowing MNEs from disregarding their wholly owned foreign entities.

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