Thursday, March 28, 2024

Tax that could negatively impact American consumers scheduled for hearing this week

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CHELAN - The Washington State legislature might have concluded their regular session, but politics are still churning at the federal level, and there is one bill up for hearing this week that could impact all American consumers.

The Border Adjustment Tax (BAT), drafted by Speaker of the House Paul Ryan, would administer a 20 percent tax on all imports. U.S companies that make their products in America could deduct the cost of goods, but ones made over seas would not be privy to the same preferential treatment.

A report from CNBC in March correlates the BAT to being a “linchpin for the corporate tax reform plan” by raising $1 trillion over the next 10 years.

However, labor groups like the Freedom Partners and Americans for Prosperity have published a report claiming the bill would negatively impact areas of the U.S economy that rely heavily on imports like, manufacturing, energy, retail and agriculture.

“BAT is a tax on the consumers,” Brian Dodge, Vice President of Public Affairs for the Retail Industry Leaders Association succinctly said in a conference call with various media members on Thursday, May 18. “It will lead to consumers paying $1,700 more for products they need so certain corporations can operate tax free.”

From gas to shirts and avocados, all imports are subject to a 20 percent tax, which in turn would raise prices at the check stand. Consumers could see as much as a 30 to 40 cent hike in gas prices if the tax is implemented. In addition to the potential for retailers to raise prices, lay off employees and possibly shut their doors, there is also a shared concern among business leaders that the tax will have a devastating impact on any business that exports.

“If the U.S. were to impose a BAT, then it’s likely that other countries would retaliate, damaging U.S. exports,” President of Schweitzer Engineering Laboratories in Pullman Washington, Edmund O. Schweitzer wrote in a press release on Monday, May 22. “In this scenario, both countries lose.”

A wide range of executives are pushing against the bill, which is scheduled for hearing in the Ways and Means Committee this week.

Dave Reichert, who represents the 8th District of Washington which includes Chelan County, is the chair of the Ways and Means sub-committee on Trade stated on May 9, that he was in favor of the idea because “it would be needed to make the overall tax package’s revenues to stay steady. Roughly 200 nations have some type of border tax or tariff system,” Reichert said to reporter John Stang from Crosscut. “We are one of the few major economies that do not use border adjustments.”

Although his staff was contacted, Reichert did not immediately respond to questions from the Mirror about why he is supportive of the tax.

A report published on Tuesday, May 16 revealed that out of 238 House Republicans only about 15 appear supportive of the tax, while more than three dozen have either raised concerns or remain undecided.

Even if the plan passes through the House a bevy of Senators have affirmed the tax plan will be dead on arrival.

Although Dodge said he and other labor groups are in favor of tax reform and lowering the corporate tax rate of 35 percent, they view the bill as a “poison pill” for the American people and will continue to educate and reach out to representatives to express their disdain for the tax.

Given that Democrats are likely to unite against tax reform regardless of the border adjustment tax, Republicans in Congress will have to come together if they want push any reform through.

Zach Johnson can be reached at lcmeditor@gmail.com or (509 682-2213

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