House Ways and Means Chairman Kevin Brady said he's open to reviewing parts of the House Republican tax blueprint as Congress looks for a path forward on trying to make U.S. businesses more competitive globally — even as Treasury Secretary Steven Mnuchin offered his most direct criticism of the plan yet.
“We know there are legitimate concerns — including from some of our witnesses here today and our colleagues on the other side of the aisle — about how it will affect American workers, businesses, and consumers,” Brady said Tuesday during a hearing to discuss a controversial proposal for a border-adjusted tax on imports. “We are committed to working with all of you to address these concerns.”
Meanwhile, Mnuchin sounded a clear warning about the BAT proposal during an appearance in Washington.
“One of the problems with the border-adjusted tax is that it doesn't create a level playing field,” said Mnuchin, who is playing a key role in shaping legislation with the House and Senate. “It has very different impacts on different companies, it has the potential to pass on significant costs to the consumer, it has the potential of moving the currencies.”
The House Republican leaders' tax plan depends in part on taxing U.S. companies' domestic sales and imported goods while exempting exports. The concept has faced resistance from President Donald Trump's top economic advisers as well as criticism among Senate Republicans. Retailers and other importers have been trying to kill the idea and Target Corp. CEO Brian Cornell testified Tuesday on their behalf. Opposing him was Bill Simon, a former top executive for Wal-Mart, who recently called the retail industry “hysterical” on the issue.
'Very Successful'
Simon made it clear that a border-adjusted tax would need to be implemented carefully to avoid damaging retailers and raising consumer prices.
“If we take the time and do the work and sit down in a group and iron out, lay out what it will look like, I think it will be very successful” for U.S. manufacturing without harming other sectors, Simon said.
House Speaker Paul Ryan said May 18 that a border-adjusted tax “should have some kind of an adjustment and phase-in period.” The retail lobby, however, has said it opposes BAT in any form.
The border adjustment portion of the House leaders' tax plan is estimated to raise more than $1 trillion in new revenue over the next decade, helping to pay for cuts to the corporate and individual income-tax rates that the GOP also wants. Writing a revenue-neutral tax bill is important to Republicans, who plan to move the legislation through the Senate without any Democratic votes. To achieve that aim, Senate rules require that the bill can't increase the federal deficit in the long run.
But Trump's White House has been cool to the BAT proposal, and Republican leaders have said it doesn't have much chance of passing the Senate. During Tuesday's hearing, Rep. Lloyd Doggett, a Texas Democrat, said the BAT is already on “life support.”
Bloomberg News
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