Robert M. Russell was quoted in a recent Tax Notes article entitled “Senate International Plan Not Without Taxpayer ‘Silver Linings,’” published on April 15, 2021. Russell comments on various proposals within the Senate Democrats’ international tax framework, released on April 5, 2021.
The article notes:
“In those cases where BEAT’s hitting [taxpayers] because they are not getting the credit, that really wasn’t the intention of who BEAT would target. . . .BEAT was intended to be an inbound provision,” Robert Russell of Kostelanetz & Fink LLP said, pointing to the header labeled “Inbound Transactions” in the TCJA under which the BEAT is found and arguing that the disallowance of the credit enabled the BEAT to target outbound companies. “By making this change in the Wyden [framework], it’s saying . . . ‘let’s write it to say what it means and not just get these [companies] that are caught in it by a poorly worded statute.’”
“It would be poor planning to not rewrite [the GILTI statute] the way [Congress] wants it and just rely on the existing Treasury regs,” Russell said. “The question was whether old Treasury had any firm ground to extend [the high-tax exception] to GILTI. . . . It wouldn’t be a stretch at all to have to say you have to rewrite that in the statute.”
According to Russell, the whole economic reason behind the allocation of R&D expenses is to benefit future product sales everywhere. “You develop the vaccine in the U.S. that is then sold anywhere around the globe. Shouldn’t some of those expenses be allocated to what happens over there?” Russell said. “But layered on top of tax policy is what are you incentivizing in terms of red, white, and blue jobs. . . . [The change] would not only be taxpayer favorable. I think they are right; it would be jobs favorable.” Russell added that he thinks the change could win bipartisan support.
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