Reform of US tax is a topic that elicits much debate and feeling in the corporate world, probably because there are so many questions and very few certainties. No one really knows how US taxation will change or when exactly this is likely to happen. Contrasting voices from the corporate world are critical of efforts by the Obama administration to move towards a 'level playing field' for corporate taxation. At the same time, the OECD's base erosion and profit shifting (BEPS) initiative and the EU's recent stance on corporate taxation seem to be moving steadily towards achieving a fairer regime of global harmonisation for corporate income tax at home and abroad.

But many are not happy with the proposed US tax reforms. In July this year, one US lawyer wrote in Forbes of the Obama administration's continuing “campaign against US multinational corporations to increase their overall tax burden”. In the same piece the lawyer says there is “little chance” of the the administration’s proposals for international corporate tax reform being adopted by Congress.

Two proposals in particular seem to have caught the author's ire:

• one is the 19% minimum tax on foreign income, whether the company brings the money back to the United States or not.
• the second is a one-time 14% tax on any offshore earnings that have not previously been taxed in the US up to the point when the annual 19% tax would commence.

Corporate tax in the US is currently 35%, compared to 20% in the UK and 12.5% in Ireland. The proposals from the Obama administration would in effect ensure that all US multinationals pay a 35% rate of tax, whether they repatriate foreign earnings to the US or not. Voices from the world of corporate finance say this would undermine economic growth, competition and jobs.

Frank Calderoni, CFO at Red Hat, a US open-source software company, argues that the current US tax regime discourages companies from investing their overseas earnings in the United States. Writing in CFO Magazine, he calls for major reform to boost investment in the US. Significantly lowering the US corporate tax rate is his key recommendation, although he doesn't state what this lower rate should be. Calderoni goes on to suggest that only income from domestic business, transactions and sources should be taxed, arguing that this would be an incentive to repatriate and invest offshore earnings thereby promoting investment in the US economy.

However, a point of consensus is that simplification is needed in the US tax code. This simplification won't be easy to obtain. Philip G Cohen, associate professor of taxation at Pace University Lubin School of Business, also writing in CFO Magazine, puts forward the argument that the US political system is too intertwined with corporate donations, which are themselves heavily linked to special corporate tax breaks and credits. Cohen writes: “Those who lack the special connections accorded to privileged donors shoulder the cost of Congressional giveaways.” So corporate tax in the US isn't just a complex code in itself that needs reform, but it also has untold levels of political complexity.

Reform, though badly needed, won't be easy. Yet with 66.31 per cent of financial professionals in the EU in favour of extending current requirements for corporate tax transparency, maybe it is time for US financial professionals to look more closely at developments at EU and international level. As we get more detail and clarification on how the OECD's base erosion and profit shifting (BEPS) initiative will be implemented around the world, this could change the debate completely.