It's based on an ever-evolving talk that I gave multiple times in 2017, most recently at the interdisciplinary conference, "International Tax Policy in a Disruptive Environment," that the Max Planck Institute for Tax Law and Public Finance held in Munich on December 14-15, 2017. A final version of the paper will be appearing in a forthcoming conference volume of the Bulletin for International Taxation, to be published by IBFD.
Its abstract goes something like this:
In the aftermath of the short but spectacular career of the destination-based cash flow tax (DBCFT) as a widely-discussed tax reform option in U.S. tax policy debate, this paper argues that we should generally move on from focusing on the DBCFT as a discrete package. While its political future (if any) is hard to predict, discussing it as a package tends to impede, rather than advance, clear thinking about the underlying issues.
The DBCFT has three main elements: (1) adopting a broad-based VAT (or increasing the VAT rate, in countries that already have one), (2) reducing the origin-based corporate (or business) income tax rate to zero, and (3) adopting a wage subsidy. Intellectual clarity would be greatly advanced by evaluating each of these elements separately, rather than the DBCFT as a package. It also would be advanced by more consistent recognition of the points that (1) countries can (and frequently do) have both VATs and origin-based corporate income taxes – it is not an either/or proposition – and (2) even if a destination-based VAT is more efficient than an origin-based tax, that does not make the case for having only the former, especially in a system that otherwise retains income taxation of individuals, and that serves distributional goals as well as that of efficiency (which would be advanced even more by having a lump-sum tax).
In addition, the DBCFT, unlike its forebears the flat tax and X-tax, does not involve specifying how individuals are taxed on wage and investment income. This impedes analyzing how it, as compared to those more comprehensive instruments, would affect the fiscal system as a whole, in any given instance where it was adopted.