Border Tax Would Punish Consumers, Kill Jobs
February 9, 2017
This article appeared in the Milwaukee Journal Sentinel February 6, 2017
While there is broad consensus on the need to rein in the regulatory reach of the federal government, there is growing disagreement over tax reform.
Since the election of President Donald Trump, the stock market has rallied to historic highs as investors have expressed their bullish confidence that the new Republican governing majority in Washington will usher in policies that create strong and sustained economic growth. This optimism is being fueled by the prospects for sweeping tax and regulatory reform.
While there is broad consensus on the need to rein in the regulatory reach of the federal government, there is growing disagreement over tax reform. The stakes of this debate couldn’t be higher for Speaker Paul Ryan (R-Wis.) and his Republican colleagues in the House of Representatives.
It has been more than 30 years since Ronald Reagan last reformed our tax code. In the three decades since, Washington special interests and lobbyists have littered the tax code with complicated deductions and loopholes that reward the biggest corporations at the expense of middle America. The existing tax code picks winners and losers, discourages growth and has punished working families who have seen their wages stagnate over the last decade, fueling the discontent in the electorate that resulted in Donald Trump’s victory.
Ryan and his Republican majority have an historic opportunity to simplify the tax code and provide relief to overtaxed families and employers, making America more competitive and generating the better-paying jobs that middle-class families deserve. Republicans could squander this moment if they remain committed to the bad idea of establishing a new Border Adjustment Tax on imports. The BAT is really a $1 trillion national sales tax that would reward big corporations that already use loopholes to avoid paying their fair share of federal taxes at the expense of middle- and low-income families. These working families spend a much larger share of their disposable income on basic necessities such as clothing, food and gas and would bear the brunt of the BAT.
The economic pain associated with this punitive new tax should not be underestimated. An average family of four could end up paying as much as $1,700 in higher prices. The cost of a gallon of gas could rise by as much as 55 cents per gallon, wiping out the economic benefits the nation has been deriving from the lower energy prices resulting from the shale boom.
The impact on employment would be severe. As America’s largest industry, retailers are responsible for one out of every four jobs in the economy. Forty-two million Americans go to work every morning because of the retail industry and those in and around it. The BAT would unduly punish this industry and could result in a spike in unemployment back to the highs in 2010 during the aftermath of the financial crisis.
This is clearly not the kind of change the American people voted for last November. Working families certainly need tax reform and tax relief, but they can’t afford to be saddled with a new trillion-dollar tax hike that will drive up the prices of everything from groceries to school supplies to pajamas and prescription medicines, while punishing the largest job-providing sector of the economy in all 50 states.
Ryan is one of the most thoughtful and pro-growth reformers in Washington. He needs to ask his colleagues on the tax writing committee to rethink their support for the BAT. This is another bad idea that could derail tax reform and undermine Republicans’ ability to spark the stronger economy that our country desperately needs and voters are expecting them to help deliver.