SPECIAL EDITION: Border Adjustment Tax
You Auto Know About the BAT Hearing
Earlier this week, the House Ways & Means Committee held a hearing, “Increasing U.S Competitiveness and Preventing American Jobs from Moving Overseas,” which was solely focused on the Border Adjustment Tax (BAT). Pro-BAT witnesses included the CEO of Archer Daniels Midland Company, the former CEO of Walmart Stores, and a former George W. Bush Administration Economic Advisor, while anti-BAT witnesses included the CEO of Target Corporation and a Professor of Economics from Reed College. Testimony from the hearing is available here.
Though the witness list was crafted to be intentionally lopsided in favor the BAT, most press following the hearing was in agreement that opponents of the BAT scored a significant victory by highlighting the deep divisions the new tax creates. With new defections by Republicans on the Committee and continued opposition from Democrats, it was made apparent that it would be a challenge to pass any legislation that includes a BAT.
Following the hearing, AIADA released a statement reaffirming support for pro-growth tax reform but maintaining stringent opposition to the inclusion of a BAT. Incredibly, some in Congress continue to push the BAT as a way to raise revenue to pay for tax cuts, and so we need your continued help. Believe it or not, the BAT is still in the House Tax Blueprint. We need you and your team to help us finally close this sale and put the BAT to bed for good.
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Quotes of the Week
“One of the problems with the Border Adjust[ment] Tax is that it doesn’t create a level playing field. It has very different impacts on different companies. It has the potential to pass on significant costs to the consumer.”
-Treasury Secretary Mnuchin (5/23/17 Peterson Foundation Interview)
“I know we have to pay for these tax cuts, but I don’t want it to be on the backs of everyday hardworking American taxpayers.”
-Representative Mike Kelly (R-PA) (5/23/17 Ways & Means Committee Hearing)
“What I think we should do is, cut taxes so families get to keep more of their money. Create a tax code that’s conducive to economic growth. And then cut spending. That’s what I thought the Republican Party was about. Not saying we’re going to lower some taxes and add a whole new tax. Right now, that’s what’s being talked about, is the Border Adjustment Tax. I don’t think that is what Republicans are about. So, let’s design a tax code that is conducive to growth.”
-Rep. Jim Jordan (R-OH) (Fox Business)
“Under the new border adjustment tax, American families – your constituents – would pay more so many multinational corporations can pay even less.”
-Brian Cornell, CEO of Target Corporation (5/23/17 Ways & Means Committee Hearing)
Border Adjustment Tax Proposal at Death’s Door (The Hill)
Speaker Paul Ryan’s (R-Wis.) border-adjustment tax proposal is increasingly looking like it’s on death’s door.
The proposal to tax imports and exempt exports has been facing long odds for several months, with retailers, conservative groups and senators warning that it would lead to consumers paying more for items such as clothes and groceries.
But in recent weeks and days, the concerns have been mounting from the White House and House Republicans.
“The BAT can’t pass without President Trump’s support. And it’s not clear it would pass with his support,” said Rep. Luke Messer (R-Ind.), who as GOP policy chairman is a member of Ryan’s leadership team.
“I think it’s going to be hard to get [the border-adjustment tax] through,” added Rep. Dennis Ross (R-Fla.), a senior deputy whip who is opposed to the tax.
Asked Wednesday if he thinks the border-adjustment tax is completely dead, Freedom Caucus Rep. Mark Sanford (R-S.C.) simply replied: “I do.”
For the first time, Ryan on Wednesday conceded that a House tax-reform bill might not include any type of border adjustability measure.
“That’s the kind of conversation we’re having [with the White House and the Senate],” Ryan, who has been forcefully defending the tax, said at an event hosted by Axios.
Ryan still offered a vigorous defense of the proposal, which he has long championed.
To read more from The Hill, click HERE.
Ryan: House Could Pass Bill That Doesn't Include Border Tax (The Hill)
Speaker Paul Ryan (R-Wis.) said Wednesday that he can see a scenario in which the House passes a tax reform bill that does not include a border-adjustment tax.
"That's the kind of conversation we're having [with the White House and the Senate]," Ryan said at an event hosted by Axios.
The border-adjustment tax (BAT), which would tax imports and exempt exports, was a key part of the tax plan Ryan released last year, but it is facing mounting opposition.
Treasury Secretary Steven Mnuchin publicly expressed concerns about the BAT at an event Tuesday hosted by the Peter G. Peterson Foundation, and he reportedly told House Freedom Caucus members in a private meeting that President Trump opposes the BAT. Additionally, Republicans on the House Ways and Means Committee were divided over the BAT during a hearing on the topic Tuesday.
Ryan said that congressional Republicans and the White House agree on about 80 percent of the elements of tax reform and are discussing how to broaden the tax base to pay for lower tax rates.
"A border adjustment basically taxes the trade deficit, gets you revenue to lower your tax rates," he said. "If you're not going to tax our trade deficit, like every other country does, then you'll have to get your base broadening from within the country. And that's the kind of conversation we're going to have all summer long."
To read more from The Hill, click HERE.
Border Adjustment Tax Proponents Struggle to Prevent More Republican Defections (The Washington Times)
House Ways and Means Chairman Kevin Brady mounted a renewed defense Tuesday for including a border adjustment tax in the Republicans’ proposed tax overhaul, but he is facing increasing defections from members of his party who say the tax is complicated and will end up socking consumers.
Seeking to inject new life into the proposal, Mr. Brady acknowledged “fair concerns” about it and said there is merit to the idea of phasing in the tax to give the economy time to adjust.
“I’m confident that we can bring forward the designs [and] the transition — very deliberate, very generous, including incorporating some of those issues in a way that we not just address it in the short term,” Mr. Brady, Texas Republican, said at an event hosted by the Peter G. Peterson Foundation.
A 20 percent border tax has become a centerpiece of the House Republicans’ tax overhaul, with Speaker Paul D. Ryan and other leaders saying it will level the playing field with other countries that impose similar taxes and protect American manufacturers.
Opponents counter that it will raise prices on goods sold inside the U.S.
“Under the new border adjustment tax, American families — your constituents — would pay more so many multinational corporations can pay even less,” Target CEO Brian Cornell testified to Mr. Brady’s committee on Tuesday.
To read more from The Washington Times, click HERE.
Treasury Secretary Suggests Trump Opposes Border Adjustment Tax (Huffington Post)
The Border Adjustment Tax may not be dead, but President Donald Trump himself may be giving up on making the controversial surcharge on imports part of a tax reform bill later this year.
Treasury Secretary Steve Mnuchin indicated during a private meeting with House Freedom Caucus members on Tuesday that Trump doesn’t support the Border Adjustment Tax.
“He indicated the president is not supportive of the BAT and that we should discuss other differences that might move things forward,” one Freedom Caucus member in attendance told HuffPost, requesting anonymity.
Freedom Caucus Chairman Mark Meadows (R-N.C.) said Mnuchin indicated that Trump is moving from a noncommittal, at times ambivalent, stance on the border adjustment tax to straight-out opposition.
“He said POTUS was concerned it would affect too many people adversely that are often forgotten in tax reform,” Meadows said.
A border adjustment tax, which still has the support of some GOP House leaders, would impose significant levies on imported goods from clothing to auto parts, driving up prices for Americans.
”It is somewhat of a tax on consumers,” another Freedom Caucus member, Rep. Rod Blum (R-Iowa), told HuffPost.
To read more from Huffington Post, click HERE.
This Week in Trade & Tax News
Border Adjustment Tax Faces Uphill Battle (US News & World Report)
GOP Divisions Appear to Grow Over Proposal for a Border Adjustment Tax (The Washington Post)
Mnuchin Cites Border-Tax Concern as House Panel Seeks Tweaks (Bloomberg)
Central Pillar of House Tax Reform Plan Draws Friendly Fire (Politico)
Target CEO Says Import Tax Bets 'Paychecks on an Untested Theory' (Minneapolis Star Tribune)
Challenges Facing Border Tax Plan on Display at Ways and Means Hearing (Morning Consult)
This Week in Auto News
Study: Small Cars More Prone to Driver Deaths (The Detroit News)
Ford Ousts Mark Fields as CEO and Installs Jim Hacket (The New York Times)
U.S. Justice Department Sues Fiat Chrysler Over Diesel Emissions (The Detroit Free Press)
Rep. Mike Kelly (R-PA) didn’t grow up on a laptop, he grew up on a blacktop, and he wants to hear from the people in the retail business about the actual effect the BAT would have on consumer prices.
Rep. Jim Renacci (R-OH) hears CRICKETS when he asks hearing witnesses if they can assure him that currency will adjust under the BAT and there will be no effect on consumer prices.