From the Tuesday Morning Jolt:
To Quote the Joker, ‘It’s Simple… We Kill the BAT.’
Remember that talk that compared to repeal and replace, tax reform was going to be easy? Yeah, not if you include the “border adjustment tax.” Under the proposal, U.S. companies that import goods from foreign suppliers would no longer be allowed to deduct those purchases, so a new tax would be effectively implemented on all imported goods, including crude oil.
A group of businesses opposed to the tax, Americans for Affordable Products, gathers comments from just about every big-name conservative economic thinker criticizing the BAT proposal:
Americans For Prosperity’s Tim Phillips: “We are against this approach because in the end, it is making life more expensive for all Americans, especially low and fixed-income families. Instead of picking winners and losers, Congress should pursue a simple, pro-growth approach that lowers rates, eliminates loopholes, simplifies the tax code, and above all, protects consumers from new tax increases.” (“AFP Issues Letter Opposing Border Adjustability Tax,” Americans For Prosperity, 1/27/17)
Koch Industries’ Mark Holden: “‘[The Border Adjustment Tax is] just a tax that’s going to be passed on to people who shouldn’t be taxed,’ said Mark Holden, who is now co-chairman of the Koch Seminar Network. He indicated the issue could be a key one for evaluating how strongly to support lawmakers in future elections. ‘It will be one of the things we look at,’ Holden said. ‘Sure, there aren’t elections for a few years, but we’re hopeful that we can get with leadership and get them to think of better ways to do this, and not pass on a huge new burden to consumers.’” (Jim Geraghty, “Koch Network Ready For A Fight On The Border Adjustment Tax,” National Review, 1/28/17)
(I hear that piece that quoted Holden was really good. That guy really knows his stuff.)
CATO’s Daniel Mitchell: “I don’t like [the Border Adjustment Tax] because I worry it sets the stage for a value-added tax. I don’t like it because it is designed to undermine tax competition. I don’t like it because it has a protectionist stench and presumably violates America’s trade commitments. I don’t like it because that part of the plan only exists because politicians aren’t willing to engage in more spending restraint. And I don’t like it because politicians should not try to reinvent the wheel when we already know the right way to do tax reform … My advice is that Republicans abandon the border-adjustable provision and focus on lowering tax rates, reducing double taxation, and cutting back on loopholes. Such ideas are economically sounder and politically safer.” (Daniel J. Mitchell, “Don’t Ruin A Chance For Tax Reform With ‘Border Adjustments,’”Foundation For Economic Education, 2/22/17)
CNBC’s Larry Kudlow: “At this moment I am completely unconvinced about a Border Adjustability Tax. I don’t want a planned economy where we’re going to tax imports, which is going to blow the middle class, you know, Walmart shoppers and so forth, and subsidize exports. I want a market economy. We’ve lived this way for so many years. I don’t want to emulate Europe. I don’t want to emulate Asia, for example. I do agree with my friend Andy Busch that basically if we have the kind of business tax reform for large and small companies as Steve Moore and I wrote in the Journal today, that’s going to fix a lot of these issues. We will become the most hospitable investment environment in the world for our own companies and for international companies. So, that’s the way to fix it.” (CNBC, 1/27/17)
Club For Growth President David McIntosh: “On the other side is the Club for Growth, a free markets advocacy group, which said the losers under a border tax will be average Americans. Former Rep. David McIntosh, the club’s president, said the House GOP was wrong to chase after the goal of revenue-neutral tax policy. ‘Instead of trading one tax for another, the GOP needs to focus on cutting rates, and cutting spending and the size of government to match,’ he said.” (Stephen Dinan, “GOP’s Border Adjustment Tax Divides Conservatives, Pits House Against Trump,” The Washington Times, 1/24/17)
Forbes Media’s Steve Forbes: “In fact, an outbreak of Beltway-itis seems to be the only reasonable explanation for the Border Adjustment Tax fanatically being pushed by establishment Republicans in the House of Representatives. Make no mistake, the BAT will inflict American working families – the very people critical for Donald Trump’s election – a whole lot of hurt … The BAT is absolutely unnecessary to attract businesses and capital to our shores. Cutting the profits tax to 15 percent and minimally taxing – or not taxing at all – overseas earnings would lead to a flood of money pouring into the U.S. Countless foreign companies would be eager to set up shop here … But on the BAT, Republicans have to cure themselves of this ailment if they want to rev up the economy – and avoid having to pursue other opportunities after next year’s elections.” (Steve Forbes, “Will Washington Republicans Succumb To Beltway-Itis?,” FOX News, 2/22/17)
Former Reagan Economic Advisor Arthur Laffer: “I think the border tax adjustment is a major mistake to put into legislation. It’s a huge bureaucratic mess to be honest with you. If it’s done ideally, Maria, which would be a tax on imports matched by a subsidy on exports of the equal size, it would have the same effect as devaluing the currency which would lead to domestic inflation. But if you look at it, there will be all sorts of nuances, all sorts of political grab bags going in the process and I just think they should just do tax rate reductions, get rid of this pay-for notion and don’t touch a border tax adjustment. It just makes no sense.” (FOX Business, 2/9/16)
Any big-name conservative economic thinkers left?