The economics of the Border Adjustment tax

Lastly, border taxes increase government revenues in periods of trade deficit, however, given the net foreign asset position of the U.S., they result in a long-run loss of government revenues and an immediate net transfer to the rest of the world.

That is from a new working paper by Omar Barbiero, Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki.  By the way, this does mean the idea doesn’t actually work.


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