Another approach which is used in U.S. state and local taxation by
virtue of an interstate compact, is to have entities (or consolidated groups
of corporations) prepare one tax return for the entire world and then to allocate pro-rata percentages
of that global return to different jurisdictions based upon a handful
of factors that are relatively hard to manipulate and bear a meaningful relationship to where income is earned such as
sales, employment and the location
of physical
assets.