This thesis compares and contrasts two different systems for taxing US multinational corporations' foreign-earned income to determine whether the US should adopt the alternative territorial tax approach. This thesis begins with discussing the pros and cons of the current worldwide tax system in the US. It then follows with the comparison of the alternative territorial approach. Like the worldwide, the territorial system has important pros and cons the US needs to consider before deciding to switch from its current approach. To help strengthen the argument towards adopting a territorial tax system, this thesis evaluates the tax systems of other relevant and comparable countries, focusing on Japan who transitioned from a worldwide to a territorial in 2009. This thesis finishes with outlining specific policy actions that the US should implement when transitioning to a territorial system to not only ease the transition but also maximize the value of a territorial approach. Therefore, this thesis concludes that the US should adopt a territorial tax system in place of its current worldwide approach due to the territorial's superior tax policy and administration.