Border Adjustment Tax Should Be Incentive to Mid-Market Firms—RSM Report
A new RSM report says, if approved, a large-scale border adjustment tax could present opportunity for midsize companies.
If approved, a large-scale border adjustment tax could present significant opportunity for midsize companies, a new report from RSM contends.
Among other changes, the plan would substitute a tax on cash flow for corporate entities instead of the current tax on income; it would also reduce the corporate tax rate to 20 percent from the current 35 percent.
“Whether the border adjustment becomes law or not, the idea of such a radical shift in the tax code presents an opportunity for middle-market businesses to get reacquainted with their supply and value chains, which may be disrupted and distorted in the aftermath of any border tax implementation or the imposition of selective trade tariffs,” writes Joe Brusuelas, RSM US chief economist and a co-author of the report.
If the tax change goes through, he says, it would amount to a tax reduction equivalent to roughly 1 percent of GDP, or $190 billion. That should prompt a boost in capital expenditures by U.S.-based firms, while encouraging the repatriation of corporate profits abroad. The change would likely amount to fewer tax inversions and make the United States a more attractive tax location, Brusuelas says.+
Download the full RSM report here.