The paper provides a framework for designing international tax rules by outlining the various behavioral margins they apply to. It then goes on to analyze three specific policy issues in terms of preserving the neutrality of choices along the relevant margins: (1) Which foreign taxes should be credited against home country tax liabilities? (2) Should the income from intangible assets like patents be taxed by the host country or the country in which it was developed? (3) Should the local sales by a foreign company determine the income tax imposed by the consuming country? Should the rules be changed because of electronic commerce? The analysis shows that the current foreign tax credit rules lack any coherent basis, either in terms of efficiency or fairness. For example, a tax on gross assets should be creditable, as well as a tax on gross income that does not allow deductions for interest. The income from intangible assets like patents should be sourced in the country in which the intangible asset was developed and be subject to its tax rate. That preserves the undistorted choice among alternative locations for exploiting an intangible. The analysis of the relationship between income taxes and trade taxes shows that in extreme cases a tax on imports may be justified to offset the distorting effect of income taxes. But electronic commerce is unlikely to create such a case. It is like any other technical change that lowers transactions costs.