J. Clifton Fleming, Jr. (BYU), Robert J. Peroni (Texas) & Stephen E. Shay (Deputy Assistant Secretary for International Tax Affairs) have posted Some Perspectives from the United States on the Worldwide Taxation vs. Territorial Taxation Debate, 3 J. Australasian Tax Teachers Ass'n 35 (2008), on SSRN.  Here is the abstract:

The U.S. approach to taxing foreign-source income is a hybrid worldwide system in form. However, because of deferral of U.S. tax on foreign-source active business income, liberal cross crediting opportunities and other defects, the U.S. system can actually produce a better-than-exemption result in the form of a negative rate of U.S. tax on foreign-source income. Moreover, the current U.S. system involves more complexity than the typical hybrid exemption system without achieving a dramatically greater revenue yield.

These shortcomings of the U.S. system plus the movement of other developed countries towards hybrid exemption systems has led to serious suggestions that the United States should adopt a hybrid exemption system. Most observers agree that the present U.S. hybrid worldwide system is, indeed, unacceptable and requires major reform. Beyond that point of agreement a pair, however, of debates has emerged. Although these two debates are distinguishable and have quite different answers, there is an erroneous tendency to believe that the solution to the first also dictates the outcome of the second. We strongly disagree.

The first of these debates focuses on the question of whether a well-designed hybrid exemption system is superior to the present U.S. hybrid worldwide system. As explained below, we believe that a well-designed hybrid exemption system is preferable to the defective regime presently employed by the United States. This is a spurious and distracting discussion, however, because there is no need for the U.S. system to be so poorly designed. Therefore, it is inappropriate to use the highly compromised U.S. approach as the point of comparison in the argument over whether the United States should adopt a theoretically correct exemption regime.

The second debate is the appropriate controversy. It centers on whether a well-designed hybrid exemption system is superior to a well-designed worldwide system that would differ importantly from the seriously flawed hybrid regime currently being operated by the United States. We conclude that even a well-designed exemption regime is distortive, inefficient and unfair and that a properly constructed worldwide system is the preferable alternative.