Impact of Import Tax on Big Corporate Deals Unclear: Mazur

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By Alison Bennett

A controversial proposed border-adjustable system that would tax imports but not exports raises major questions, including how big corporate deals would be treated, Treasury Assistant Secretary for Tax Policy Mark Mazur said.

With unanswered questions of how the U.S. would set up tax collection at the border or what precisely would be taxed, the impact of a destination-based tax on transactions such as spinoffs and mergers and acquisitions is unclear, Mazur said Dec. 16 at an international tax conference sponsored by George Washington University Law School and the Internal Revenue Service.

As work in the House continues on Republican proposals for a border-adjustable system, the fact that no other country has such a system makes the outcome a mystery, Mazur said.

“No one has done this,” he said. “That’s the open question. Can you resolve all of these questions in a reasonable period of time?”

He said it might not work to compare the system to a value-added tax, because it is brand-new, while a VAT exists in 160 countries.

Mazur, who is leaving the Treasury Department on Jan. 20 to become director of the Urban-Brookings Tax Policy Center, also said it remains to be seen how the financial industry would be treated under a border adjustability regime, and whether imports from the cloud would be subject to border adjustments.

While proponents of such a system have argued that exchange rates would adjust so that import taxes wouldn’t hurt U.S. companies, Mazur said that might not happen in all cases. He described a hypothetical situation in which Wal-Mart imports toys from China as an example where that exchange rate solution might not happen.

“Is this really going to work?” Mazur asked.

To contact the reporter on this story: Alison Bennett in Washington at

To contact the editor responsible for this story: Meg Shreve at

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