2017 Articles

Tax Planning Under the Destination Based Cash Flow Tax: A Guide for Policymakers and Practitioners

Miller, David S.

This essay describes some basic tax-planning strategies under the destination based cash flow tax (DBCFT) proposed as part of the “Blueprint” published by the Committee on Ways & Means of the House of Representatives. 1 This article is designed first for policymakers so that they can either correct or confirm the strategies I describe, and second for the practitioners and taxpayers that will navigate the DBCFT if it is enacted.

A central theme of the discussion that follows is that the DBCFT contained in the Blueprint is not the “pure” DBCFT proposed by economists.2 Instead, it is a hybrid that incorporates aspects of the pure DBCFT, but also elements of our current income tax. Many of the planning opportunities under the DBCFT arise because of its hybrid nature.