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House Republicans crafting a tax overhaul plan are exploring ways to design a bill that will allay concerns about a proposed import tax, Ways and Means Chairman Kevin Brady (R-Texas) said at a Washington forum.
Brady said at a Georgetown Law School forum that he has been asking for “ideas to make sure we get the design right, the mechanics right and the transition right.” But there would be no special exceptions for any kind of importers, he said.
The comments capped a week that saw the launch of two dueling groups of U.S. businesses, for and against the idea of a tax on imports, with Speaker Paul D. Ryan (R-Wis.) and Brady backing the idea both at forums and to the media. But Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) and others senators said they have questions about the border adjustability idea and how it would affect specific industries and consumers.
Import-reliant retailers and net exporters, such as Pfizer Inc. and Boeing Co., have clashed over this key provision of the House Republican tax plan. Proponents say it would boost domestic manufacturing. Opponents say the 20 percent import tax would raise prices on consumer products.
Brady reiterated that border adjustments would be compliant with the World Trade Organization, and that common ground on the plan is growing between the Trump administration and the House GOP.
The National Retail Federation estimated the proposed tax “could cost the average family $1,700 in the first year alone,” citing an analysis it commissioned from Ernst & Young LLP.
The plan, which taxes imports but not exports, doesn’t subsidize products sent overseas at the expense of imports, economist Alan Auerbach of the University of California Berkeley said at the Georgetown forum.
Much of the opposition and support for border adjustability is based on a “mistaken understanding” about how the system would work, said Auerbach, an economist who helped design the plan.
Auerbach said the plan’s elimination of interest deductibility has a more direct impact on industries that rely heavily on leverage, such as private equity and real estate. Opposition from those groups has been much quieter, he said.
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