Retailers holding their breath over what would transpire with the controversial border adjustment tax may be able to breathe a sigh of relief sooner than they thought.
Since the House Ways and Means Committee hearing Tuesday addressing the BAT, that tax seems to be spiraling closer to death.
At the hearing, committee chairman Kevin Brady (R-Tx) touted the tax’s would-be ability to make American manufacturing competitive again, while Target’s CEO spoke out against it, saying it would force the retailer to cut jobs rather than create them in order to survive. But beyond those statements, it became clear just how divided the Republican party is on the issue.
On Tuesday, Treasury Secretary Steven Mnuchin said the BAT wouldn’t level the playing field, but comments he made in closed-door conversations held a little more weight.
When asked directly about his stance on the border adjustment tax, Mnuchin reportedly cited what the retail community has been fixed on: that the tax would force price increases for consumers, among other struggles.
“He actually said straight out that he doesn’t support it and the president doesn’t support it,” Judy Chu (D-Ca.), Ways and Means Committee member, told Newsmax. “Unless he was lying to us yesterday [Tuesday], I really felt it was dead on arrival.”
On Wednesday, House Speaker Paul Ryan—who has been leading the GOPs proposed tax bill—even said the House tax reform bill might not include the border tax at all, though he still continued to defend it.
One idea behind the border tax, which would tax imports at 20 percent and leave exports exempt, was to provide an incentive for U.S. companies to keep as much of their manufacturing dealings domestic as possible. If the border tax gets scrapped, they’ll have to find another way to achieve that goal.
“A border adjustment basically taxes the trade deficit, gets you revenue to lower your tax rates,” The Hill reported Speaker Ryan as saying. “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.” In other words, they’ll have to come up with a lot of money the tax would purportedly raise in revenue ($1 trillion in 10 years) that no one knows where to find yet.
Either way, the border tax is reeling right now.
The White House and the House are divided on the issue, and the House is divided amongst itself. GOP leaders have said the BAT tax likely wouldn’t pass the Senate either.
“The BAT can’t pass without President Trump’s support. And it’s not clear it would pass with his support,” GOP policy chairman Rep. Luke Messer (R-Ind.) told The Hill.