Why the GOP Should Abandon the Border Adjustment Tax

COMMENTARY Taxes

Why the GOP Should Abandon the Border Adjustment Tax

Feb 24, 2017 1 min read

Commentary By

Stephen Moore @StephenMoore

Senior Visiting Fellow, Economics

James Wallner

Former Group Vice President, Research

House Ways and Means Committee chairman Kevin Brady, R-Texas Bill Clark/CQ Roll Call/Newscom

Investors, employers and workers are getting nervous. What’s holding up the promised Trump tax cuts?

The White House and GOP congressional leaders are hinting that tax cuts may not come until after Obamacare is repealed — meaning late summer at the earliest. But delay is the enemy of what these politicians need most: an early signature legislative victory that delivers on a key promise to voters and ramps up growth quickly.

One distraction stalling the tax plan is the thorny issue of border adjustability. The Border Tax Adjustment, proposed by the House Ways and Means Chairman Kevin Brady, would in effect impose a tax on American imports while exempting American made exports from income tax calculations. That's a giant change to how America taxes its businesses, and respected economists are divided as to whether this makes economic sense. Meanwhile, the business community is split down the middle. This is no way to build consensus for a tax plan.

If the border adjustment tax lacks the necessary support to pass Congress, Brady and his colleagues should consider abandoning it—at least for now. Otherwise, it risks further delaying tax reform.

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This piece originally appeared in Politico