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Economic and Foreign Policy Implications

Economic and Foreign Policy Implications of the Administration’s “Dual Capacity Taxpayer” Proposals

The Administration Proposal would achieve the wrong result under the U.S. tax system, harm U.S. companies and jeopardize U.S. strategic interests. In many countries that impose higher taxes on certain activities undertaken by dual capacity taxpayers—including the U.K.—those taxpayers would be partially or completely denied FTCs for foreign taxes actually paid. In the short term, the Administration Proposal would unfairly, and in effect retroactively, subject U.S. dual capacity taxpayers to harmful double taxation on their existing long-term investments.