Border Adjustment: Explained
The House Republicans’ plan to upend how the U.S. collects corporate taxes
Republicans are proposing a tax concept common in other countries but novel in the U.S. The idea is “border adjustment.” Under the plan, companies wouldn’t be able to deduct the cost of imports from their revenue, a move that today enables them to lower their overall tax burden. At the same time, exports and other foreign sales would be made tax-free. The plan would operate like a tax on the trade deficit and raise about $1 trillion over a decade, according to independent estimates, which could help pay for lower tax rates and other provisions