Destination Based Corporate Tax: An Alternative Approach

13 Pages Posted: 12 Dec 2016 Last revised: 25 May 2017

Date Written: December 11, 2016


With the election of Donald Trump and the Republican Party’s domination of Congress, it is time to seriously consider House Speaker Paul Ryan’s blueprint for fundamental tax reform. The Ryan blueprint combines reduced individual rates with a destination-based consumption or cash flow type business tax applicable to large businesses. This blueprint has three major problems: It is incompatible with our WTO obligations, it is incompatible with our tax treaties, and will not solve the problems of income shifting and inversions it is designed to address. This paper proposes an alternative destination-based corporate tax (DBCT) that addresses these problems while retaining the advantages of “border adjustability.”

Keywords: Ryan Proposal, Border Adjustments, Destination Basis, Formulary Apportionment

JEL Classification: H26

Suggested Citation

Avi-Yonah, Reuven S., Destination Based Corporate Tax: An Alternative Approach (December 11, 2016). U of Michigan Law & Econ Research Paper No. 16-028, U of Michigan Public Law Research Paper No. 529, Available at SSRN: or

Reuven S. Avi-Yonah (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

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