President-elect Donald Trump is voicing concerns over the Republican proposed corporate tax plan. The tax plan, which would tax the imports and exempt exports of companies, has a “border adjustment” that Trump feels “will bring a bad deal to the table.”
President-elect Trump told The Wall Street Journal, “Anytime I hear border adjustment I don’t love it. Because usually it means we’re going to get adjusted into a bad deal. That’s what happens.”
The border adjustment tax plan is being implemented as part of the larger plan designed to keep American companies in the U.S. to produce and create jobs here.
Kyle Pomerleau, the director of federal projects at the Tax Foundation, which is largely considered a conservative group in Washington, told The Wall Street Journal, “If you take out the border adjustment, you have to really think about an entirely different reform.”
According to the Fox News, if the plan goes through, foreign companies that import goods to the U.S. would have to pay the tax, thus, increasing the cost of imports.
Exporters love the idea. But importers, including big retailers and consumer electronics firms, say it could lead to steep price increases on consumer goods. The lobbying has already begun.
Currently, the U.S. taxes all the profits of U.S.-based companies even if they make their money in other countries, but they are allowed to defer the foreign money they make until they either reinvest in the U.S. or give the money to their shareholders. This has given companies an incentive to invest their profits in the other countries instead of bringing the money back to the U.S. where they will be taxed. Ultimately, this causes many U.S. based companies to move operations abroad.
House Republicans want a tax system based on where a company’s products are consumed, rather than where they are produced.
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