Currently, we know that U.S. government employs the worldwide tax system to tax corporations and citizens on their worldwide income. While most developed countries use the territorial tax system to tax only the income within the countries’ borders. In order to avoid high overseas income tax, some U.S. corporations move their headquarters abroad, which obviously would cause decline of tax revenue in America. In my opinion, one way to stop this “flight of capital and tax base” is to pivot toward the territorial tax system.
In the first place, the worldwide tax system should be abandoned because it drives American business outside home country. Under worldwide tax system, U.S. corporations have to pay tax to U.S. government wherever they
…show more content…
Some people may argue that the foreign tax deduction and credit could induce company’s intend of foreign investment. However, unfortunately, it is still the same amount of tax one company would afford, regardless it decides to invest abroad or not. When a lower tax rate paid to host country, the tax difference between host country and home country also need to be paid to home country.  So if a company has a well-thought-out decision-making, it would give up on such a meager return and high-risk plan. Hence, the worldwide tax system in U.S. makes domestic companies less likely to invest abroad than those companies in other countries adopting the territorial tax system.
Even if a company would like to expand its business in foreign countries, it would be a significant burden to reinvest its foreign income back to U.S., because the worldwide tax system only allows corporation to defer the U.S. taxation on condition that it continuously invest its foreign income abroad. As long as a corporation repatriates its overseas earnings, the extra U.S. tax would be imposed on. 
That is to say, under worldwide tax system, U.S. corporations would either reduce their foreign investment, or refuse to repatriate their foreign income. Neither of the two options would be beneficial for the development and international competitiveness of corporations. It is clear to say that the worldwide tax system interferes the decision-making of corporations