For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
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 email@example.com
To contact the editor responsible for this story: Meg Shreve at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)