In a Wall Street Journal op-ed, AEI fellows Paul Ryan and Kyle Pomerleau revive House Republicans’ 2016 proposal for a destination-based cash flow tax (DBCFT) as an alternative to tariffs and a way to “finish the job” on tax reform initated by the Tax Cuts and Jobs Act—”the ultimate made-in-America policy.”
Letters from Adam Michel (Cato Institute) and Veronique de Rugy (Mercatus Center), as well as Grover Norquist (Americans for Tax Reform), respond.
Paul Ryan & Kyle Pomerleau, Op-Ed., A Tax-Reform Alternative to Trump’s Tariffs, Wall St. J. (Oct. 14, 2025)
Rather than pursuing new tariffs, Mr. Trump should work with Congress to adopt a destination-based cash flow tax, or DBCFT. This business-tax reform would address many of the president’s concerns over trade, expand the American economy, and offset the lost tariff revenue. . . .
Treasury Secretary Scott Bessent is correct to be concerned about losing revenue while the federal government already faces mounting debt and deficits. Adopting a DBCFT could address these fiscal concerns and replace tariff uncertainty with tax certainty. This will help the administration achieve many of the president’s trade goals in a way that would restore business confidence, expand the economy, and improve living standards.
Adam Michel & Veronique de Rugy, Letter, A Tax-Reform Alternative to Tariffs Is a Trap, Wall St. J. (Oct. 20, 2025)
The policy’s supposed fiscal virtue is precisely what makes it dangerous. The tax is popular in Washington because it’s a money machine. We should remember why Congress abandoned the policy in 2017. The DBCFT is a clever acronym for an old Beltway habit: spend more, tax more and call it reform. The solution to Mr. Trump’s tariffs is more mundane: Congress must reassert its power to levy tariffs and limit spending.
Grover Norquist, A VAT Has No Place in the American Tax Code, Wall St. J. (Oct. 22, 2025)
A VAT, or a value-added tax, might as well be French for “big government.” Paul Ryan and Kyle Pomerleau’s proposal for [DBCFT] is something of a VAT Lite. Should it become law, a future Congress would doubtless turn it into the real thing.
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