Needless to say, I am delighted to hear that Speaker Paul Ryan and Ways and Means Committee chairman Kevin Brady have decided to put the border-adjustment tax (BAT) aside. In a joint statement with the other members of the Big Six tax-reform group, they say:
While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.
That’s correct and it is great news as it allows us to unite behind the tax-reform agenda.
There is also this part of their statement, which is otherwise pretty innocuous, that I found interesting:
And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base.
The “without transitioning to a new domestic consumption-based tax system” part of the statement, I assume, means that there will be no Value Added Tax (VAT) on the table in our near future. That is also great news. And after the BAT debacle, I wonder how the growing conservative support for a carbon tax will be affected, since such a proposal is likely to include some sort of border adjustment. I doubt Republicans will go anywhere near that issue for a while.