01/19/2017

Trump Questions GOP Tax Plan

He worries changes could be a "bad deal"

President-elect Trump has clashed with congressional Republicans over whether to include a border adjustment tax in the tax reform legislation currently being drafted in the House.

While Trump has threatened companies like Toyota with a border tax on imports, Speaker Paul Ryan (R-WI) and Ways and Means Committee Chairman Kevin Brady (R-TX) have pushed for a border adjustment tax that they say would eliminate companies’ incentives to move manufacturing outside the U.S. Border adjustability means that companies can no longer deduct the cost of their imported goods, while exports would be exempted from taxes. Theoretically, that means that businesses could reduce prices for products they sell outside the U.S.

“This is a very simple policy,” Brady said this week. “Is your product or service consumed in the U.S.? If it is, it’s taxed equally regardless of where it is produced. So, for the first time, we’ll be on a level playing field with China and our competitors. For the first time, we will have eliminated any tax incentives to move jobs or research or headquarters overseas.”

Trump has called the border adjustment tax “too complicated,” which is a problem for Republican tax writers because it’s the main source of revenue for the overall tax reform package. The Urban-Brookings Tax Policy Center estimated the border adjustment tax would raise $1.2 trillion over 10 years.

“Anytime I hear ‘border adjustment’ I don’t love it,” Trump told The Wall Street Journal. “Because usually it means we’re going to get adjusted into a bad deal. That’s what happens.”

This article was provided to OSAE by ASAE's Power of A.