How House Republicans Want to Revolutionize the Corporate Tax Code: QuickTake Q&A

President Donald Trump and the Republican-controlled Congress want to undertake the biggest overhaul of the U.S. tax code in three decades, with steep rate cuts across the board for businesses and individuals. But some House Republicans want something else as well: a radical shift in the way U.S. corporations are taxed. They’d scrap the 35 percent corporate income tax rate in favor of a system described as -- brace yourself -- a “border-adjusted, destination-based cash-flow tax."

The House plan would tax products based on where they’re consumed -- that is, their destination -- rather than where they’re produced. “Border-adjusted” means that corporations’ exports wouldn’t be taxed, only their imports. "Cash-flow" means the tax is based on a company’s patterns of revenues and expenses, not just its income. To sum up: The plan calls for collecting corporate taxes based on the value of goods and services sold domestically. That’s a tectonic shift away from the current system, which is aimed at collecting taxes on companies’ worldwide income.