Problem: X Corp, a U.S. Corporation, is subject to a 21% tax rate in the United States on its worldwide income. The income from their Irish branch is also subject to a 12.5% Irish tax. A U.S. tax system with capital-export neutrality would credit the Irish tax against the potential U.S. tax liability and tax the Irish pro?ts in the United States at a 8.5% residual tax.
What is X Corp's tax rate? What would be the residual rate?