James M. Jeffords: “today, I am joining with my colleague from New York, Senator Moynihan, to introduce a bill that will eliminate an aspect…”

“today, I am joining with my colleague from New York, Senator Moynihan, to introduce a bill that will eliminate an aspect of our internal revenue laws that is fundamentally unfair to taxpayers with income from foreign sources. Under our system of taxation, U.S. citizens and domestic corporations earning income from sources outside the United States are subject to U.S. tax on that foreign-source income. In all likelihood, that income will also be subject to tax by the country where it was earned. Thus, the same income could be taxed twice, by two different countries. To guard against the double taxation of this income, the tax code allows taxpayers to offset their U.S. tax on foreign-source income with the foreign taxes paid on that income. This is accomplished by means of a foreign tax credit; that is, the foreign tax paid on foreign source income is credited against the U.S. tax that would otherwise be payable on that income. The details of the foreign tax credit rules are extraordinarily complex. (Indeed, virtually all of the Internal Revenue Code's provisions governing international taxation are complex.) The basic principle underlying the foreign tax credit rules, however, is simple: to provide relief from multiple taxation of the same income.”