Retailers can breathe a sign of relief — border tax is no longer on the table.
Republican Congressional and Trump Administration leaders intent on tax reform for the country issued a statement Thursday that border taxes won’t be considered. Retailers have long feared that border taxes, which have been advocated by President Trump as a stimulant for domestic production, would greatly raise consumer prices and destroy businesses.
But on Thursday, House Speaker Paul Ryan (R-Wisc.), Senate Majority Leader Mitch McConnell (R-Ky.), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-Utah), and House Ways and Means Committee Chairman Kevin Brady (R-Tex.) issued the following joint statement on tax reform that included the following:
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“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”
The statement also indicated that the priority would be put on reducing corporate and personal taxes and simplifying the tax code. It said that the president and Congress are “fully committed to ensuring that ordinary Americans keep more of their hard-earned money and that our tax policies encourage employers to invest, hire, and grow. And under the leadership of President Trump, the White House and Treasury have met with over 200 members of the House and Senate and hundreds of grassroots and business groups to talk and listen to ideas about tax reform.
“We are all united in the belief that the single most important action we can take to grow our economy and help the middle class get ahead is to fix our broken tax code for families, small business and American job creators competing at home and around the globe. Our shared commitment to fixing America’s broken tax code represents a once-in-a-generation opportunity, and so for three months we have been meeting regularly to develop a shared template for tax reform.”
“Today’s update on the status of tax reform is very encouraging, particularly since the border adjustment tax is no longer under consideration,” said NRF president and chief executive officer Matthew Shay. “By removing this costly element of reform, the way has been cleared for swift action on a middle-class tax cut that will put more money in the wallets of the American taxpayer. Changing our outdated tax code is fundamental if we are to grow our economy, encourage investment and create jobs.
“Retailers pay the highest effective corporate tax rate of any sector of the U.S. economy,” Shay said. “Broadening the tax base and lowering the corporate tax rate will allow our industry to compete effectively in the global marketplace, particularly without the additional burden of a border adjustment tax. In the end, our workers and the consumers they serve are the ultimate beneficiaries of this effort.”
According to the NRF, most retail companies pay a tax rate at or close to the full 35 percent and that the border taxes would have cost the average family as much as $1,700 a year.
The American Apparel & Footwear Association also welcomed the joint statement by Congressional and Administration leadership that drops the border tax from tax reform discussions. “The border adjustment tax was a bad idea looking for a place to happen. Luckily it will not happen in the United States of America,” said Rick Helfenbein, president and ceo of AAFA. “Today’s announcement by Congressional and Administration leadership is an important step on the path to providing long-term tax reform that simplifies the code, lowers burdens, supports U.S. jobs, grows the economy and makes our nation more globally competitive.”