Effects of a Border-adjusted Corporate Tax

Source: National Center for Policy Analysis
by Richard B McKenzie

"U.S. firms pay the world's highest corporate tax rate — a federal tax of 39.1 percent combined with an average 4.1 percent state tax on profits from domestic sales, or foreign sales (when and if the profits are repatriated). In contrast, the lower tax rate embedded in the prices of those goods produced in other countries and shipped to the United States often gives them a competitive advantage, whether due to other countries' lower value added taxes (VAT) or much lower corporate tax rates. House Speaker Paul Ryan and other Republican House members have proposed a lower corporate tax rate of 20 percent with a border adjustment. A border-adjusted tax (BAT) would apply to profits on domestic sales and on imports, but would not apply to profits from U.S. exports to other countries." [summary — full paper available as PDF download] (05/17)

http://www.ncpa.org/sub/dpd/index.php?Article_ID=26755