They’ll invert to bypass the tax.
Fox ’20 [Edward and Zachary Liscow; July 2020; Assistant Professor of Law at the University of Michigan Law School; Associate Professor of Law at Yale Law School; Tax Notes Federal, “A Case for Higher Corporate Tax Rates,” vol. 167]
But there are at least three types of ways in which companies may shift activity or profits abroad in response to a high cash flow tax. First, companies may shift more of their profits abroad without moving “real activity” (that is, employment and capital investment on the ground). Common methods are mispricing transactions between subsidiaries,64 strategic use and mispricing of debt among subsidiaries,65 or other accounting tricks that shift measured income from high-tax jurisdictions to low-tax ones. Another step to avoid high U.S. taxes without shifting real activity — and one with high political salience — is moving the corporate domicile abroad, known as inversion.66 Second, even projects earning the normal return might be shifted abroad in response to a high cash flow tax, if doing so makes it easier to shift existing rents to low-tax jurisdictions. Third, some projects may have the potential to earn rents in multiple locales. For those projects, high taxes on rents encourage moving real activity abroad.67 As a result, companies sometimes consider the statutory rate, even under a cash flow tax, leading them to potentially avoid locating rent-earning projects in a jurisdiction with a high cash flow tax rate, especially if the source of the rent is relatively mobile (for example, intellectual property).