Talk of a "border adjusted" tax has gone from the sidelines to center stage in Washington, which has a lot of people asking: What is it exactly?
House Speaker Paul Ryan and members of President-elect Donald Trump's transition team met Monday night for 2 1/2 hours to discuss the House GOP's corporate tax reform plan — including a controversial provision that would essentially subsidize exports and tax imports.
Emerging from the meeting, Trump's Chief Strategist Stephen Bannon told Reuters that they discussed "border adjustability," which is one of the key provisions of Paul Ryan's tax blueprint.
Currently, U.S. corporations are taxed on their worldwide profits at 35 percent. The House GOP plan would change that radically.
The new tax formula would tax domestic revenue (minus domestic costs) at a much lower rate of 20 percent. The net effect would be one that favors exports over imports.
The change would convert the country's tax system to a "territorial" system rather than a worldwide tax system, making it similar to what all of America's major trading partners do.