Abstract: This section presents the response of the authors to a commentary by Harry Grubert regarding their article on U.S. corporate income tax as of June 2005. The increasingly global nature of U.S. business activity implies that the future of the U.S. corporate income tax hinges on its complicated international tax provisions. Current U.S. provisions for taxing foreign income, and much of the thinking that underlies them, are based on concepts that are commonsensical, but often inconsistent with the underlying economics. The spirited comment by Grubert is a useful continuation in the ongoing debate on the appropriate taxation of foreign income. It raises numerous points on which intuition can easily go astray and, thereby, indirectly illustrates the benefits of hard and dispassionate analysis. The authors' article makes three related points. The first point is that the U.S. tax system currently imposes a significant burden on foreign income earned by U.S. corporations. In order to measure the magnitude of the economic burden, it is necessary to identify incentives created by the tax system, an elementary insight that is easily lost by instead applying methods used to calculate tax revenue for government budgets. The second point is that countries with worldwide tax systems, such as that used by the U.S., would improve their own welfares, and world welfare, by reducing the burden of their taxation of foreign income.