I was delighted to see someone make a constructive suggestion to resolve the noxious and unprecedented Border Adjustment Tax (BAT). Bill Parks, of the company NRS (an outdoors company), today published his modest proposal in The Hill. Bill suggests that the BAT be eliminated (count me in) and that the territorial aspect of taxes apply to net income, rather than revenue. In other words, baaaaad companies like ours that make products overseas would still get to deduct COGS and pay taxes based on something approximating GAAP net income, while providing a modest boost to exports.
Bill has his own tax blog and has published his proposal there, too. [Jeez, tax blogs everywhere now!] I think this is a worthwhile suggestion and may offer a way out of this maelstrom. Frankly, it's a new proposal to me, and needs further study. Bill says his "Sales Factor" proposal is WTO-compliant. Back of the envelope, it looks workable financially. To really build a model based on his proposal, we would need to see the rest of the bells and whistles which would come along with it. There is likely to be movement in numerous areas of the tax law in the House bill when it comes to light, not least of which is projected individual and corporate tax rates. Bill claims in The HIll article that his plan would actually increase revenues by $550 BB over ten years, presumably because he is assuming recapture of tax revenues which slipped the net through inversions and transfer pricing games. This is the real inequity in our tax system - where suckers like our company pay maximum U.S. rates on global income, while some other taxpayers live in an alternative universe of super-low rates created by tax gambits. That's unfair to us, but doesn't make us poorer. I am not willing to pay with my money to stick it to those guys. Bill's proposal has promise.
There are a lot of questions to answer, so it's only a start. Financial businesses are complex to tax, and I have absolutely no idea how this idea addresses them, existing inversions, profits trapped overseas, sale of intangibles, etc. I am but a humble toymaker, and don't consider myself competent to design systems of taxation. I am competent to assess whether the proposed system will kill me, however . . . .