Destination-Based Income Taxation: Neither Principled Nor Practical?

This article concludes that modified source rules, an outsourcing model for transfer pricing, and expanded taxable presence rules can create a destination-based income tax consistent with underlying principles of international income taxation. It analyzes the history and development of the current and past source, transfer pricing, and taxable presence rules in U.S. international tax in making this determination. However, it identifies serious design concerns with the most-discussed destination-based reform proposals and calls for further analysis to provide a workable path forward for destination-based income taxation.