Trump’s Waffling on Border Adjustments Shows Tax Uncertainty

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By Aaron E. Lorenzo

As quickly as President-elect Donald Trump seemed to close the door to a border adjustment tax on imports, he reopened the debate.

The issue will be discussed in shaping legislation to revamp the U.S. tax code, he said in an interview with the news outlet Axios, effectively reversing previous remarks to the Wall Street Journal days earlier.

Trump’s back-and-forth underscores the potential for uncertainty ahead on tax changes, according to a couple of lobbyists and a tax analyst who spoke on condition of anonymity in order to more freely discuss Trump. His negotiating style is atypical for the Washington set, but Trump nonetheless does have an openness, one of them told Bloomberg BNA.

“The evolution of the Trump position is something we’ll see a lot,” another told Bloomberg BNA.

Border adjustments are “still on the plate,” Trump told Axios Jan. 17.

But in the previous interview, reported Jan. 16, Trump had said it would be too complicated to adopt border adjustments, a key component of the House Republican tax plan that has been in development for several months. The provision is both a key revenue raiser in the overall proposal and its central plank for improving the U.S. tax base by diminishing existing incentives to operate or relocate abroad.

But the border adjustment idea has drawn the ire of certain industries, including retail and refining.

‘A Way Forward.’

The Trump administration would continue “to work with Congress on a way forward” on border adjustability, incoming White House press secretary Sean Spicer said Jan. 18.

“This border-adjustable tax is a very simple tax but it’s powerful in the way it works,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said on CNBC Jan. 18, adding that other countries already do it, so the U.S. needs to catch up in order to “leapfrog” them.

Brady and Trump are continuing to talk, Brady said.

Speaking on a webinar Jan. 18, Rep. Pat Tiberi (R-Ohio) said a tax overhaul would be complicated and it was early in the process.

“We are not all yet on the same page but again it’s early and it’s certainly something we think will get done,” the Ways and Means member said, acknowledging the differing opinions on the border adjustability issue.

Talking Bipartisanship

Rep. Bill Pascrell Jr. (D-N.J.), another Ways and Means member who spoke on the same webinar, organized by Baker & Hostetler LLP, said that he couldn’t see 52 Republican senators voting for the House GOP blueprint.

Pascrell said he remains open to a discussion on border taxes, and Brady said he has begun outreach across the aisle.

With assistance from Laura Davison and Kaustuv Basu in Washington.

To contact the reporter on this story: Aaron E. Lorenzo in Washington at aaron@bna.com

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

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