The United States’ Individual and Corporate Income Tax : Future Reform possibilities

Abstract

In this tax policy article, Professor McNulty reviews many of the broader tax reform issues presenting themselves in the United States after the major efforts made in 1986. After a brlef description of the US tax system, he focuses on the most prominent individual income tax policy problems and proposed solutions, with the author’s own recommendations, including some for major structural reforms. Then he turns to the corporate income tax, its place in the US iucome tax system and its relation to the individual income tax. He compares the ’classical’ unintegrated US taxes with the Australian shareholder imputation credit system and with other forms drawn from the US international and domestic tax regimes and US tax policy literature, including the new US Passive Foreign Investment Company model and the expanded S Corporation election for closely-held corporations. Finally, he summarises his conclusions and overviews the package. Readers will gain a sense of the ongoing tax policy debate in the US and will find parallels with both reform discussions and recent legislation in Australia.