Some Thoughts on the Incidence of Foreign Taxes

Abstract

This 2000 article was prompted by the fact pattern and Tax Court decision in Compaq Computer v. Commissioner, 113 T.C. 363 (1999). While other commentary has focused on the application of the "economic substance" doctrine in this case, this article focuses instead on the ability to take foreign tax credits based not on economic incidence but on legal incidence and how this allows for crediting of foreign taxes economically borne by other actors in the marketplace.

Keywords: income taxation, international taxation, foreign tax credit, Compaq Computer

JEL Classification: H20, H24