House Republicans in Congress have proposed a "Border Adjustment Tax," which has generated no small amount of confusion (at a press conference this morning, Speaker Paul Ryan commandeered reporters' audio recorders for an impromptu tutorial). Yesterday The Tax Foundation issued a guide to understanding the proposal. Its key findings:

• In 2016, the House Republicans released a tax plan that would lower the corporate income tax rate to 20 percent and convert it into a “destination-based cash-flow tax.”
• An important feature of this tax is a “border adjustment.” This provision would apply the tax to imports and exempt exports.
• The application of the border adjustment moves the corporate income tax from an “origin-based” tax to a “destination-based” tax.
• Both origin- and destination-based taxes are trade-neutral. As such, switching from one to the other does not alter the trade balance, nor put the United States at a trade advantage or disadvantage.
• Although economists do not expect there to be a trade advantage to switching to a destination-based tax, there are a few positive aspects of doing so: it would prevent profit shifting, eliminate the need for complex anti-base erosion provisions, and broaden the tax base within the budget window.
• There are also challenges with this approach. It is not known yet whether this provision could be struck down by the World Trade Organization (WTO). In addition, a few implementation and transition challenges may exist.

You can read the full report here.