Just because the proposed border adjustment tax hasn’t been making headlines—or headlining lawmakers’ tax reform arguments—lately doesn’t mean retailers are taking a win in this arena for granted.
Now that healthcare reform is dead (again, maybe), discussions about how to overhaul the tax system are expected to heat back up.
The National Retail Federation is staying ever vigilant on the subject, sending a letter to the House Ways and Means Committee this week that reiterates retailers’ arguments on the plan that would lower corporate taxes from 35 percent to 20 percent but tax the cost of goods sold on imports.
Though its framers, House Speaker Paul Ryan and Ways and Means Committee Chair Kevin Brady, see the border adjustment tax as a way to boost businesses producing American-made goods, opponents say it will actually penalize American consumers.
“The solution for reducing the corporate tax rate should not be to shift the tax burden to individuals and families through the imposition of a consumption tax,” NRF senior vice president David French said in the letter. “Since the overall purpose of pro-growth tax reform should be to improve the standard of living of the American people, it would be counterproductive to include a consumption tax in that plan.”
[Read about White House plans for tax reform: Pence Promises Fair, Swift Tax Reform That Will Benefit U.S. Businesses]
Calling it a consumption tax that would squeeze low and middle income families to the tune of $1,700 a year, French instead called for eliminating deductions and exemptions that only help the few, which would create funding for an overall reduction in corporate rates.
Individual retailers are also continuing to keep their message out there. In a conversation recently with Bloomberg, Kohl’s CEO Kevin Mansell called the border adjustment tax “a foolish idea” given that it would hurt retail, one of the biggest employment sectors in the country.
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The NRF’s statements come just days after Vice President Mike Pence spoke at the organization’s Retail Advocates Summit. While Pence devoted a large chunk of his speech to tax reform, there was no mention of the BAT. Whether that was him playing to his audience or a sign the BAT is off the White House agenda, is yet to be determined. Although President Trump has never been much more than lukewarm on the proposed provision, it’s clear retailers feel it’s too soon to let up.
And it seems the efforts thus far have had an effect, Brady is quoted in Reuters as saying the public outcry from corporations has forced lawmakers to consider alternatives. “To their credit, they mobilized quickly and aggressively, and yes, it had an impact,” he said.