CASH-FLOW TAX

The cash-flow tax has been proposed as an alternative to the corporate income tax on grounds that it would define the tax base more clearly and more simply in the face of widespread departures from the comprehe nsive income tax of actual practice. The cash-flow tax, and its varian ts, would require careful design. Simplicity may prove elusive because of anticipated administrative problems related to tax avoidance and e vasion through transfer pricing, to inflation adjustments, and to inco mpatibility with existing international tax regimes. Thus, the tax rem ains theoretically attractive but difficult to implement.