Paul Ryan (R-Wis.) says his proposed tax reform plan, which includes a new tax on imports, could encourage investment in the United States and help U.S. manufacturers. But his optimism isn’t convincing dozens of Republican lawmakers to vote in favor of the plan, and this poses a problem, since it’s unlikely to garner any support from House Democrats.
Known as the “border-adjustment tax,” Ryan’s proposal is designed to raise revenue by imposing a tax on imports while lifting a tax on domestically-produced exports.
Based on interviews with lawmakers and their aides, The Hill reported on Tuesday that only a small percentage of GOP House members are currently willing to vote for the bill. The rest of them are either undecided or say they’re harboring serious reservations.
“I’ve said all along, I have real, real concerns with that tax,” said Rep. Jim Jordan (R-Ohio) in late March after Sen. Lindsey Graham (R-S.C.) said in February that the House tax plan wasn’t likely to get 10 votes in the Senate.
In April, Rep. Scott Perry (R-Pa.) posted a link to an anti-border-tax ad from the National Retail Federation on his Facebook page and stated, “We’ll continue to stand strong against changes to our Tax Code that fail to put people first.”
Members of the conservative House Freedom Caucus have been among its most vocal critics.
Some economists theorize that the tax will strengthen the value of the dollar, but Rep. Mike Kelly (R-Pa.) has been skeptical. “I don’t want to go by theory,” he said, “and I’d want to know for sure, because it hurts American consumers.”
Calling it “a tax increase,” Rep. Roger Williams (R-Texas) stands with an anti-border-adjustment tax coalition of retailers, called Americans for Affordable Products.
Treasury Secretary Steven Mnuchin said that the administration doesn’t think the border-adjustment tax “works in its current form,” but revisions are being considered.
Ways and Means Committee Chairman Kevin Brady (R-Texas) is expected to discuss the tax reform plan with members of the conservative Republican Study Committee this week, and the Ways and Means Committee will begin its hearings on Thursday.
“Chairman Brady and all members of our committee speak regularly with other members of the conference about bold ideas for pro-growth tax reform, including ending the ‘Made in America tax,’” said Brady spokeswoman Emily Schillinger. “They will continue to speak with members individually and in groups about how pro-growth reforms … will create jobs and increase paychecks in members’ districts across America.”
Defending the border-adjustment tax in a radio interview that aired Sunday, Ryan said, “Equalizing the tax treatment of American goods and services will help put us in a better competitive playing field. So, the border adjustment tax is basically getting us in sync with the rest of the world, because the rest of the world already border adjusts their taxes.”
Freedom Caucus members are not unified in their opposition, and Chairman Mark Meadows (R-N.C.) has repeatedly stressed that the group has not taken a formal position.
House Freedom Caucus member Rep. Morgan Griffith (R-Va.) praised the tax in a newsletter to constituents last month, writing, “Implementing the border-adjustment tax will stop penalizing products Made in America.” And Rep. Chris Collins (R-N.Y.) told reporters in March that the border adjustment tax is “such a win-win-win-win.”
Others are taking a wait-and-see attitude. “It’s early,” said Rep. Tom MacArthur (R-N.J.), noting, “We haven’t really gotten into that to the degree that I’m willing to stake out a position.”
Rep. Tom Cole (R-Okla.) wants to see the bill in its entirety, but so far, he’s not a fan of the border-adjustment tax. “There’s no question that border adjustment doesn’t unify Republicans; it divides them,” he said.
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