How the Republican corporate tax plan works
April 6, 2017
THE WASHINGTON POST – With the defeat of the ACA repeal bill, Republican House leadership has started to turn its attention toward tax reform, in what could be its biggest agenda item of the term.
One particularly contentious proposal concerns how corporations’ tax liabilities are calculated, moving from the corporate income tax to something called a destination-based cash flow tax, or less precisely, a border adjustment tax. Depending on how the economy reacts to the change, the tax may favor some companies over others, and some experts say it may disproportionately burden the poor.
To see how this tax works, imagine two fictional companies: The exporter makes its products in the United States and sells them abroad, while the importer makes its products abroad and sells them in the United States.
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