Senator Slams Border Adjustment Tax, Calls on Congress to Reject It

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Donald Trump has been full of divisive plans and proposals since he took office less than one month ago, and one such scheme coming out of his administration, put forth by House Republicans, has a senator in uproar.

While many are in agreement that it’s time for tax reform in the U.S., fewer are united on the border adjustment tax being the way to do it. The proposed plan would put a 20 percent tax on all imports into the United States and make exports tax free.

Supporters of the border adjustment tax argue that it would help boost U.S. manufacturing, while others simply see the tax making goods punitively costly for companies and, ultimately, for consumers.

Stepping in with his concerns on the matter, U.S. Senator David Perdue (R-Georgia), said in a letter to his colleagues that the border adjustment tax is “regressive” and that it “hammers consumers, and shuts down economic growth.”

The clear effect of the tax, Perdue said, would simply be an increase in consumer prices.

“This would hammer consumer confidence and lower overall demand, this putting a downward pressure on jobs,” Perdue wrote. “In fact, a recent economic study on a border adjustment tax by the University of Maryland estimates that some industries could face employment declines of up to 20 percent.”

What’s more, Perdue went on, proponents of border adjustment argue that it wouldn’t place an extra burden on taxpayers because currency reevaluation would strengthen the dollar by 20 percent, which would increase the spending power of the greenback abroad.

However, as Perdue explained, “Even if we apply this economic theory, we end up with more losers than winners. A successful currency reevaluation would trigger a multi-trillion dollar reduction in the value of foreign investments held by U.S. investors, including many pension funds and retirees.”

While he agreed that the tax code needs to change, Perdue urged his colleagues not to let bad ideas become law.

“This proposed border adjustment tax is a bad idea and should not become a permanent part of our tax code,” he wrote. “I urge you to focus on tax policies that would enhance fairness, innovation and capital formation in our country—and ultimately generate real growth.”

There are other efforts to oppose the border adjustment tax too. A group of 100 business and trade associations recently formed the Americans for Affordable Products (APA) coalition in an effort to convince lawmakers to forgo the border tax plan.


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