The author of this column argues that the corporate “destination-based cash-flow tax” proposed by House Republicans could provoke WTO lawsuits against the United States in the same way that new high tariffs would. He concludes that a better corporate tax option – legal under international law – would be to cut tax rates, curb tax shelters, broaden the tax base, and work for globally agreed rules on the use of tax havens. Alternatively, the United States could consider enacting a value-added tax. Fearful that the punitive tariffs threatened by President Donald Trump would prompt a global backlash against US trade, including a flood of successful lawsuits against the United States in the World Trade Organization, many are urging the new President to support instead the border tax adjustments that House Republicans are reportedly moving ahead aggressively to try to enact. Speaker Paul Ryan has said that imposing border adjustments as a part of corporate tax reform is a better way than tariffs of countering alleged unfair trade practices by other countries. He foresees his alternative approach as “levelling the playing field without starting trade wars.” Another leading House Republican, Rep. Devin Nunes of California, has added, “Once people familiarise themselves...
Written by James Bacchus
Tags: WTO, International Trade Law, United States, WTO