The American corporate tax system is broken. Faced with one of the highest tax rates in the world, many multinational corporations in the United States move their operations and reported profits offshore or undertake “inversions” to relinquish their American tax nationality. Elaborate regulatory and enforcement measures have been unable to stop this. Vilifying companies for their behavior hasn't worked, either.
Fortunately, bipartisan support for corporate tax reform has been growing in Washington. In place of the old system, Republicans in the House of Representatives have proposed adopting a tax — the destination-based cash-flow tax — that would be levied on the domestic cash flows of all businesses operating or selling here. (Your domestic cash flow is your revenues in the United States minus the wages, salaries and purchases you pay for in the United States.) This would mean introducing “border adjustments” to the current system — exempting exports from tax, but taxing imports.
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