Allowing a taxpayer to choose either a credit or a deduction for foreign taxes paid can be explained by equity considerations.

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Allowing a taxpayer to choose either a credit or a deduction for foreign taxes paid can be considered equitable as it provides the taxpayer with some flexibility in how they choose to claim the benefit of the taxes paid. Both options aim to avoid double taxation, but the credit method typically provides more direct relief than the deduction, which indirectly reduces taxable income.

Allowing a Taxpayer to Choose Either a Credit or a Deduction