Nel presente scritto, gli Autori effettuano una sintetica ed originale analisi delle principali caratteristiche della Destination Based Cash Flow Tax (“DBCFT”), la quale è una nuova forma di prelievo che gli Stati Uniti stanno valutando di introdurre in sostituzione dell’imposta sulle società.
U.S. Corporate tax reform and Wallace Stevens
In the present paper, the Authors give a synthetic and original analysis of the main features of the Destination Based Cash Flow Tax (“DBCFT”), which is the new levy that the United States are evaluating as a replacement for the corporate income tax.
There are, it seems, thirteen ways of looking at a blackbird , and doubtless just as many perspectives on the Destination Based Cash Flow Tax (“DBCFT”), the spanking new levy that House Republicans have advanced as a replacement for the corporate income tax. We undertake here to identify those perspectives, and thereby to portray the richness of this proposal. Much of the commentary to date on the DBCFT has honed in on specific features, whether favorably or unfavorably. But as the great poet mused while strolling in a Connecticut forest, examining the bird’s discrete features may not do justice to its complexity.
The DBCFT is not simply another corporate income tax proposal. Let’s hold it up to the light and consider it from all sides.
ONE. Begin with a general view from on high. According to its champions, the destination feature furnishes a “pay for” that allows the rate of tax on corporations to be dropped from 35 to 20 percent. Revenue estimates show the proposal will raise approximately $1 trillion over 10 years, by denying a tax deduction for purchases of goods and services from suppliers outside the United States. This tax cost will largely be passed on to consumers, or at least that is the expectation (and the stock market certainly assumes that corporations will not bear the additional tax). In the previous major tax reform effort in the United States, the Tax Reform Act of 1986, increased taxes on corporations were used to fund tax cuts for individuals. This time, individuals will be funding tax cuts for corporations. Without the destination feature, the rate cut would lose boatloads of revenue, an observation that clears the mind. It may not, however, be the best means of generating public support for the DBCFT.
TWO. On a more technical level, there is the treatment of imports, the cost of which would not be deductible under the proposal. Apart from the obvious question how this will impact distributors and consumers of imported goods and services, it is fair to ask how direct purchases from abroad will be handled, since consumers (and exempt organizations) do not care about deductions. Presumably some intermediary – hello, American Express! – will be mandated to collect the tax when a cross-border payment is made. The requisite rules will not be either simple or readily enforceable, since present practices distinguish between foreign currency and U.S. dollar payments, but not necessarily between domestic and foreign suppliers. And our failure to enact laws that require “remote sellers” located within the United States to collect state sales taxes from jurisdictions where the seller does not have a physical presence does not bode well for forcing collections with respect to sellers outside the United States.
THREE. We are told that exchange rates will adjust, the dollar [continua..]