Visiting Professor Rebecca Kysar was quoted in a Wall Street Journal article about the Trump administration’s proposed tax plan.
The Senate bill exempts some types of derivative transactions from the tax. But in exchange, banks would pay a higher overall rate in terms of the base-erosion tax. Non-banks would only owe a 10% tax on these deductible payments.
For years, many countries have been seeking ways to stop companies from so-called “stripping” earnings to reduce their domestic-tax bills with foreign payments. The U.S. Senate will have to decide how punitive it wants to be on such activities.
“There is an argument that this is an over-inclusive proposal, because it’s arguably applicable to nontax motivated transactions,” said Rebecca Kysar, a professor at Brooklyn Law School who studies international taxation and tax treaties.