The purpose of this comment is to describe some of the problems that exist in the present system of foreign tax credits, and to set forth some suggested improvements that can be made. The discussion proceeds in four steps: (1) a description of the growth of the present statutory framework, including a discussion of the political and economic factors which purported to influence its development; (2) an examination of the operation of the credit system and its limitations; (3) an examination of the limitations in greater detail with illustrations of how they are rendered largely impotent by their own internal qualifications, by subsequent tax treaties, and by careful tax planning, and a description of the resultant inequities which they have on both the government revenues and the individual taxpayers; and (4) a proposed change in the credit system which would strike a more perfect balance between the interests of the United States and those who derive income from foreign sources
