mercredi 24 mai 2017

Border Adjustment Tax

This thread may die from lack of interest, but this thing is currently being debated in congress so I thought maybe we should have a thread about it.

One thing that is very curious about this to me, given Trump's rhetoric about slapping punitive taxes on companies that move jobs to other countries, is why doesn't he support this? Isn't this exactly what he was calling for?

But, Treasury Secretary Mnuchin and some other Republicans in congress have criticized the idea:

Central pillar of House tax reform plan draws friendly fire


The fault lines widened Tuesday over a major pillar of the tax overhaul being pushed by House Republican leaders, with the proposal drawing stronger criticism from the Trump administration and getting a cool reception by some GOP members of the House tax-writing committee whose chairman is a staunch advocate.

Treasury Secretary Steven Mnuchin took the unusual step of openly criticizing the provision, which is being pushed by Speaker Paul Ryan and other GOP leaders.

“One of the problems with the border adjustment tax is that it doesn’t create a level playing field,” Mnuchin said at the Peter G. Peterson Fiscal Policy Summit, using the plan’s technical name. “It has very different impacts on different companies. It has the potential to pass on significant costs to the consumer. It has the potential of moving the currencies. We want to make sure we’re creating a level playing field.”

Those same points were debated across town, as the House Ways and Means Committee held its first hearing on the issue.

Several Republican members of the committee expressed qualms or outright opposition to border adjustment, including Rep. Erik Paulsen, a moderate from the suburbs of Minneapolis who had previously backed the proposal.

"I cannot support the border adjustability provisions as introduced," he said. "I really want to urge this committee to listen, to be educated and to address" criticism of the plan "as we move forward with reform."

Paulsen had come under heavy pressure to oppose the plan from retailing giant Target, a major employer in his district and a big contributor to his reelection campaigns. The corporation's chairman, Brian Cornell, testified against the proposal at the hearing.

Ways and Means Chairman Kevin Brady defended the proposal, saying it would boost economic growth – and with it, wages – while also acknowledging criticisms of the plan.
So companies like Target that sell a lot of imported goods hate the idea. The article also mentions that Archer Daniels Midland supports the idea. They get over half of their revenue from exporting agricultural commodities. This would presumably help their bottom line.

This is, essentially, a tariff on imported goods, is it not? It is also a tax break for exports, I think. So why does Trump oppose this? That is what I can't figure out (unless his populist rhetoric about a 'big border tax' to protect US jobs is just a lie).

Then, regardless of whether or not Trump supports it, is it a good idea? Will it protect US jobs? Would it help to balance America's trade deficit? Incentivize companies to make things in America, or not send jobs to Mexico or other countries?

via International Skeptics Forum

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