Tax Policy:

Uncertain Impact of Repealing the Deferral for Reinvested Shipping Income

GGD-90-35: Published: Mar 26, 1990. Publicly Released: Mar 30, 1990.

Additional Materials:


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed the effects of repealing the tax deferral for foreign-earned shipping income, focusing on the: (1) generation of additional tax revenues; and (2) availability of merchant ships planned for use in national emergencies.

GAO found that: (1) since the passage of the Tax Reform Act of 1986, foreign-based shipping income had increasingly been subjected to immediate taxation; (2) it could not determine the amount of foreign-earned shipping income tax revenues; (3) from 1984 to 1987, tax revenues fell due to lower corporate tax rates and a decline in foreign-earned shipping profits; (4) the Department of Defense and the Maritime Administration believed that tax changes could accelerate the decline in the number of U.S.-owned foreign flag ships and adversely affect the military's war contingency plans for ship use; (5) some factors suggested that tax changes would not lead to a ship deficiency; (6) to date, the deferral's repeal had not affected the number of U.S.-owned foreign flag ships; (7) the military planned to use 124 of the 328 U.S.-owned foreign flag ships for wartime sealift, but there were unresolved issues regarding those ships' wartime availability; and (8) U.S. requisitioning authority may not extend to ships owned by U.S. corporations' foreign subsidiaries, since the flag state may have the right to control those ships.

Sep 14, 2016

Sep 2, 2016

Aug 8, 2016

Jul 28, 2016

Jul 13, 2016

Jul 7, 2016

Jun 24, 2016

Jun 21, 2016

May 26, 2016

Looking for more? Browse all our products here