Brady’s Border Tax Phase-In Not Converting Senate Skeptics

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By Colleen Murphy

Phasing in the border adjustment provision of the House tax plan isn’t an idea that’s winning support from Senate doubters.

Two Senate Finance Committee members told Bloomberg BNA June 14 they are still skeptical of the House’s border adjustment proposal one day after House Ways and Means Committee Chairman Kevin Brady (R-Texas) suggested phasing it in over five years. House leaders want to use the 20 percent import tax to pay for deep tax cuts, but senators, retailers, and even some Ways and Means Republicans have railed against it.

“Well I don’t know if that idea is going to be more popular in five years than it is now, but at least it will be better understood,” Sen. John Thune (R-S.D.), a top-ranking Republican, said.

Brady wasn’t available for comment June 14. The House adjourned after an early morning shooting wounded House Majority Whip Steve Scalise (R-La.) and several others who were at a local park practicing for a charity baseball game. Brady has previously said the committee is working on generous transition rules for the provision and he hopes to find a solution on which the House, Senate, and White House can agree.

Not Enough

The provision’s complexity has been one of the main challenges for Republicans who are trying to pitch it. Academics say that currency prices would adjust to counteract the higher tax on imported products, but opponents express concern that the adjustment wouldn’t happen. Some members of Ways and Means raised the issue during a May 23 hearing on the topic.

Sen. John Boozman (R-Ark.) said too many unknowns still surround the provision. Wal-Mart Stores Inc., a border adjustment opponent, is based in Arkansas.

“I have real concerns about border adjustment—period—so I don’t know if it really makes a lot of difference if you do it tomorrow or you do it five years later,” Boozman said.

Koch Industries, which opposes the provision, said in a June 13 statement that while easing in border adjustment helps with some concerns, “a five-year phase in does not make a bad idea a good one.”

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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