GOP leader defends contentious provision in tax plan

House Majority Leader Kevin McCarthy (R-Calif.) on Tuesday defended a provision in the House Republicans’ tax plan that has drawn opposition from retailers and other business groups.

McCarthy said on CNBC that the “border adjustment” provision is a way “to focus on manufacturing and other jobs within America.” Under the provision, there would be a new tax on imports, and products produced for export would be exempt from the corporate tax.

“The one thing that I take form this election, this middle class has been left behind for too long,” McCarthy said. “You’ve got to get growth in this country. And tax reform can make that happen.”

McCarthy added that the proposal would allow the U.S. to tax products in the same way that other countries do.

{mosads}”The rest of the world builds something in their country, refunds the tax from that country as they send it over to America,” he said. “America taxes you when they build it and sends it to another country and gets taxed again. It is unfair.”

Business groups, particularly in the retail and oil industries, have been expressing concerns about the border-adjustment tax, arguing it would increase the prices of goods for consumers.

But McCarthy said the provision has to be considered in the context of overall tax reform.

“If you’re lowering the rate and you’re taking away the deductions, I think it’s going to be a level playing field,” he said.

The House Republicans’ tax plan was released in June, and the House Ways and Means Committee is currently working to develop legislation based on it. Congressional Republicans and the incoming Trump administration are pushing for tax-reform legislation to be enacted this year.