Progressive Consumption Taxation. To accomplish that result, the personal income tax would be levied on a simple cash flow basis: business and investment expenditures (including capital outlays) would be deductible when made, while business and … ; Cash is going out of your business in the form of payments for expenses, like rent or a mortgage, in monthly loan payments, and in payments for taxes and other accounts payable.

By contrast, a destination-based cash-flow tax does not distort behavior, but … If customers don't pay at the time of purchase, some of your cash flow is coming from collections of accounts receivable. description of four tax systems that adopt a cash-flow and consumption-based approach to taxation: the value-added tax (“VAT”), the flat tax, the X-tax, and the national retail sales tax. Consumption and Cash-Flow Taxes in an International Setting Alan J. Auerbach University of California, Berkeley Michael P. Devereux Oxford University Centre for Business Taxation This version: May 14, 2014 Abstract We model the effects of consumption-type taxes which differ according to the base and location of the tax. ... would be imposed on business cash flow… the effects of different types of consumption-type taxation on factor allocation, production and consumption in a two-country framework. Or, as economists Alvin Rabushka and Robert Hall put it, taxing income taxes what people contribute to the economy, while taxing consumption taxes … Cash is coming in from customers or clients who are buying your products or services. Part IV analyzes these proposals and provides a general discussion of cash-flow and consumption-based approaches to taxation. consumption, rather than the sum of consumption and accumula-tion. Being able to assess a company's operating cash flow (OCF)--and how that is impacted by taxes--is an important skill in evaluating a company's overall health. Cash flow after taxes is an important measure of cash flow that takes into account the impact of taxes on profits. A consumption tax—also known as an expenditures tax, consumed-income tax, or cash-flow tax—is a tax on what people spend instead of what they earn. ... One progressive consumption tax is the personal expenditure tax, sometimes called a “consumed income” tax. In particular, a cash-flow tax on a source basis creates welfare-impairing distortions to production and consumption, but is partially incident on the owners of domestic production who may be non-resident. Our particular interest is in the three versions of the business cash-flow tax levied on business profit.1 The latter three taxes differ in how the profit is allocated across the two countries.