BAT is a swing and a miss, time to scrap GOP’s import tax plan

For far too long, America’s tax code has worked against businesses and consumers. With President Trump in office and a Republican-controlled Congress, there has never been a greater opportunity to pass comprehensive tax reform. Employees and employers deserve a tax system that works for them, and it’s Congress’ responsibility to get the job done.

Unfortunately, members of the U.S. House of Representatives leadership have proposed a policy, the Border Adjustment Tax (BAT), that doesn’t level the playing field; instead, it picks winners and losers and, in the process, threatens the passage of tax reform. 

As skepticism surrounding the misguided BAT builds and more and more Republicans state they cannot support a policy that results in $1,700 in additional costs for American families, House leaders are doubling down. Just this week, a new plan emerged (let’s call it BAT 2.0) that would gradually phase in the potential tax on working families over the course of five years.  

While this would ease the political cost for members of Congress, it would do nothing to lighten the costs on middle-class households operating on shoe-string budgets. 

Similar to BAT 1.0, the five-year transitions proposed have been met with widespread opposition. For example, Rep. Mike Kelly (R-Pa.) stated, “Huge increases in the cost of products don’t really work well.” Rep. Jim Renacci (R-Ohio) said he was not “entirely convinced about the phase-in.” Veronique de Rugy with the Mercatus Center wrapped it up succinctly, writing, “A bad idea is a bad idea, no matter how quickly or how slowly it is implemented.” 

Our current tax code has not been reformed for more than 30 years. The existing tax code is complicated, provides a disincentive to invest and hinders growth. Further, the current tax code does nothing to help working families whose wages have stagnated in recent years. Finally, the existing tax code is full of complex deductions and special interest loopholes that reward corporate interests, not American families. 

Congress has a generational opportunity to enact important reforms that meet promises made by President Trump and congressional leadership to make America more competitive, create conditions for job growth and put more money in the pockets of middle-class families. However, this cannot be accomplished without dropping the BAT, be it 1.0 or 2.0, from any tax reform proposal.

The BAT would reward profitable, multi-national corporations that exploit special-interest loopholes by enacting a $1-trillion-dollar national sales tax on the backs of working households.  

The reality is that American families cannot afford to spend more of their household budgets on basic necessities, such as groceries, clothing and medicine. They cannot afford to spend up to 55 cents more per gallon of gas. The BAT would create a climate in which families are forced to choose between some of the most basic necessities, and that is exactly the opposite of what President Trump promised voters when he discussed reforming the tax code.

The BAT would also put America’s largest employment sector, the retail industry, at serious risk. Retailers employ or support 42 million people, which equates to nearly one-fourth of Americans. By taxing the products retailers import, costs are passed onto consumers, endangering jobs and exacerbating budgets. 

Last fall, voters sent a clear message that tax reform is a top priority. But instead of pushing a tax plan that will endanger jobs and increase consumer costs on American families, Congress should focus on enacting responsible reforms that level the playing field and remove special interest giveaways, while greatly streamlining and simplifying the tax code. 

It’s time to act on tax reform and put aside handouts to big companies financed by working families. Whether it is BAT 1.0 or the equally unacceptable BAT 2.0 and its five-year transition, neither can nor will receive sufficient support in Congress to become law. We need to stop wasting time one misguided policies that cannot get the votes and get to the business of tax reform.

It is time to drop the BAT and deliver on tax reform. 

David Williams is president of the Taxpayers Protection Alliance (TPA), an organization that aims to hold politicians accountable for the effects of their policies on the size, scope, efficiency and activity of government, while offering real solutions to runaway deficits and debt.

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