The Economist explains How America’s border-adjusted corporate tax would work – H.C. Feb 13th 2017


The plan was drawn up before POTUS was nominated as the Republican presidential candidate20170218_blp901

Firms currently pay corporate taxes on their profits. Border-adjustment would change how those profits are calculated. Accountants could no longer deduct imports—say, goods brought in from China—as costs. And their exports would no longer count as revenues. For tax purposes, “profits” would be domestic sales minus domestic costs. Effectively, imports would be taxed, and exports would be subsidised. As a result, retailers, who stock their shelves with imported wares, are lobbying against the change. Exporters, such as the aerospace industry, broadly support it.

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