Will the House GOP Border Tax Survive?


Businesses know the consumer will end up paying big time.

Art Laffer says that the Border Tax is a major mistake because it’s in reality a tariff! 

Steve Forbes blasted the idea of the border adjustment:

“The Republicans are proposing this crazy tax. They’re going to punish American consumers over $100 billion a year” over 10 years by making goods coming into the U.S. more expensive, Forbes told CNBC’s “Squawk Box” on Wednesday. “And these are Republicans doing it.”

The people who would be hurt most by the border tax would be middle-class workers who elected Donald Trump as president, Forbes said. “Economically it’s wrong. Politically it’s wrong.”

From the WSJ

Tax experts are puzzling over how to describe who wins and loses from border adjustment. One thing is clear, economists say: If the dollar goes up 25%, U.S. holders of foreign assets—including pension funds and endowments—would suffer a one-time loss in wealth of more than $2 trillion.

There is also global uncertainty: Other countries may retaliate, either by border-adjusting their corporate taxes or by challenging the U.S. plan at the World Trade Organization as too tilted toward American producers.

From The Financial Times:

Prices tend to be sticky, particularly when 93 per cent of US imports and more than 40 per cent of global trade is invoiced in US dollars. These prices would have to be renegotiated over time. Furthermore, the Federal Reserve and the People’s Bank of China would do their best to lean against such a currency move.

Heritage Foundation economist Stephen Moore who advised Trump:

“I think it’s a distraction,” Stephen Moore said Tuesday at an event hosted by Bloomberg BNA.

Moore, who was involved in writing Trump’s campaign tax plan but does not have job in the administration, said he supports the the House Republicans’ “border-adjustment” proposal because he thinks it “takes tariffs off the table.” The proposal is part of the House GOP tax-reform blueprint.

But he noted that other Republican thought leaders don’t support the concept, and said it’s a “pretty prickly issue.”

Via LI