The United States taxes the domestic and remitted foreign earnings of U.S. based MNEs no matter where the earnings occurred. This is an example of a ________ approach to levying taxes.

Question

Quizplus · Accepted Answer

A worldwide approach to levying taxes means that a country taxes the worldwide income of its resident corporations, including both domestic and foreign earnings. The United States follows such an approach and taxes both the domestic and remitted foreign earnings of U.S. based MNEs, regardless of where the earnings occurred. A territorial approach, on the other hand, would only tax the domestic earnings of a country's resident corporations, while a neutral approach would aim to maintain a balance between tax revenue and economic growth. Equitable refers to a fair or just approach, which could apply to any of the other three approaches depending on how they are implemented.

The United States Taxes the Domestic and Remitted Foreign Earnings