The highly controversial Border Adjustment Tax (BAT) remains a centerpiece of House GOP leaders’ plan to enact historic tax reform. But the question remains, why?
As CASE has articulated here and here, the BAT is a boondoggle, a massive $120 billion per year tax increase on the items consumers buy every day. While BAT supporters claim it will promote U.S. trade by taxing imports and exempting exports, the most it will actually accomplish is to shift the tax burden to America’s middle class and working poor.
Bloomberg this week provided an answer of sorts as to why the BAT remains the darling of committee leaders piecing together a tax proposal reform. Said Bloomberg, “by continuing to push the tax, [House leaders] will stake out a stronger negotiating position as Republican lawmakers and the White House work on a tax reform bill.”
So sources inside Congress are admitting that Congress is holding consumers hostage to the tune of hundreds of billions of dollars in higher taxes in exchange for a better deal. We’ve just gone from the absurd to the outlandish.
We thought the idea of tax reform is to lower taxes for America’s workers and consumers, not soak them every time they head to the store or fill up their car with gas. Negotiation is a tactic based on leverage to make the best deal, it doesn’t work when you ante up with something nobody wants to begin with.
If the American people actually wanted higher taxes, there’s another political party that would gladly oblige. What they voted for in November was tax reform that would broaden the tax base by lowering rates and providing them relief to improve their economic situation. The BAT does the exact opposite.
It’s high time that House leaders drop the BAT and negotiate from a position of strength, by cutting rates, simplifying deductions, ending pet exemptions, and lowering our destructive corporate tax rate. Consumers shouldn’t be hoisted onto the tax reform petard, and they shouldn’t be held hostage because Congress doesn’t have the will or the stomach to negotiate a fairer and simpler tax system. End the BAT, stat.
