Republican’s destination based cashflow tax, (DBCFT)?
I’ve read of the proposed destination based cash flowtax, (i.e. DBCFT) to replace corporate income tax.
I’m familiar with consumption taxes and income taxes, but the concept of DBCFT is much less clear to me. I can’t consider what I don’t understand.
This explanation published by the Christian Science Monitor, (a good reputable newspaper), is inadequate.
“(2) The DBCFT is essentially a value-added tax (VAT), but with a deduction for wages. Every advanced country except theU.S. has a VAT alongside a corporate income tax. The U.S. would in effect be replacing the corporate income tax with a modified VAT. A VAT taxesconsumption, not income – it has the same effects as a national retail salestax, but works better administratively”.
Double dipping?Enterprises operating within the USA deduct their normal domestic expenditures for labor costs (from what if corporate income taxes are repealed)?
How would the USA enforce a tax upon money paid to recipients beyond our borders? Isn’t that particularly difficult when the money is passed among globally operating single enterprises, or enterprises associated with each other such as subsidiary enterprises or otherwise independent enterprises that are associated by innumerable manners of other agreements?
What I’ve read thus far implies a proposal that’s only applicable to USA’s international transactions; I consider that to be less rather than more feasible than USA adopting a general value added tax, (i.e. VAT).