Trump just loves the idea of a 20 percent tax on certain imports to punish companies that send jobs overseas, as well as to (supposedly) give American companies who keep jobs here an advantage. Completely unaware of the problems with that, House Speaker Paul Ryan and the House Ways and Means Committee have included a much larger version of that tax in their tax reform plan, claiming it will bring in $1.2 trillion and make other tax cuts “deficit neutral” (meaning that tax will be at least enough to pay for what the tax cuts for their rich friends will cost us).
The House seems to like this plan. The Senate is another story. Senator Lindsey Graham appeared on “Face the Nation” to give us a more realistic picture of whether that tax, which Ryan is calling a “border adjusted tax,” has a chance in hell of passing. One might think that passing it would be easy, because the GOP controls the House, the Senate and the White House. One would be wrong. Graham sees things going this way:
“The Congress is stumbling. Republicans in the Congress — we’re all tied up in knots. The House is talking about a tax plan that won’t get 10 votes in the Senate.”
Graham doesn’t seem to be an outlier, either. Sen. David Perdue (R-GA) likewise has problems with this tax. He sees it as regressive, and something that will hurt consumers, and he’s not wrong. At 20 percent, businesses that rely on imports to keep prices low will find themselves having to raise them to pay the tax, or pay for more expensive labor.
Orrin Hatch, of Utah, and Roy Blunt, of Missouri, both believe the Senate Finance Committee will go a different way on this. Phil Gramm, of Texas, just blasted it. Indeed, it would actually be a 20 percent tax on all imported goods and services, not just on certain goods and services as penalties for U.S. companies that continue to offshore jobs.
Imposing that kind of a tax isn’t the same as raising the minimum wage, which costs companies more on the surface, but puts more money in more pockets, increasing demand for products and services. That ultimately increases sales, and thus, revenue for companies. While supporters of this particular tax believe that it would treat imports and exports equally, many detractors fear that it would raise prices anyway, especially those coming from small businesses.
To parrot Republicans on issues like the minimum wage, “It’s a job-killer.”
And an economic killer. But Ryan is desperate to get tax reform through, and he sees the border adjustment tax as a way to pay for other tax cuts that the deficit hawks, and most Democrats, believe will only serve to blow a massive hole in the federal budget. Ryan even pleaded with the Senate to “keep their powder dry,” on this issue, meaning he wants them to keep an open mind on this.
True tax reform actually has to force the wealthy and our corporations to pay their fair share before we look at tariffs and other taxes. All other attempts are disingenuous at best, and selling out to rich and corporate handlers at worst. Increased border taxes of any sort aren’t likely to help us at all. Trump doesn’t understand enough to care. Paul Ryan probably understands enough, but feels too beholden to his handlers to do anything else.
Featured image by Sean Rayford via Getty Images