Destination-dependent cash flow tax
The destination-based cash-flow control (English destination-based cash flow tax , DBCFT ) is a central point of the tax reform in 2016 by the Republican Party in the policy paper "A Better Way - Our Vision for a Confident America" was presented. It is based on the ideas of the economist Alan J. Auerbach .
While the conventional corporate tax taxes corporate profits , the DBCFT tax corporate cash flow . A decisive factor, however, is that the tax intervenes in foreign trade - hence the name component “destination-based”: Expenses for the purchase of foreign goods can no longer be deducted from income, while income from exports is no longer taxed. Only the difference between the income from the sale of domestic goods and the expenditure for the production of domestic goods is then taxed. In the end, this amounts to an import tax and an export subsidy .
The advantage is that companies are given an incentive to relocate production facilities to the USA, as imports become more expensive. The disadvantages are that the US dollar will rise due to the larger export surplus , which will bring high book profits to holders of US government bonds (above all China), while American owners of foreign currency holdings will suffer losses. The WTO rules also stipulate that imported goods must be treated in the same way for tax purposes as those produced domestically. In comparison, VAT is incurred on the purchase of domestic and foreign goods.
The main proponents of the new tax are multinational export companies such as Dow Chemical Co. , Pfizer and Boeing , while retailers, toy dealers and automotive companies are opposed to the new tax.
Individual evidence
- ↑ Auerbach, AJ (2010): A Modern Corporate Tax. Center for American Progress.
- ^ The Economist, February 13, 2017