The chairman of the House Ways and Means Committee told Breitbart News the new Border Adjustment Tax is the way for Capitol Hill conservatives to support President Donald Trump’s efforts to reform the tax code and reverse American trade disadvantages, as well as unleashing trillions of dollars currently sitting on the sidelines.
“We know what our competitors do to beat us,” said Rep. Kevin Brady (R.-Texas), who took over one of the House’s most powerful committees from Speaker Paul Ryan (R.-Wis.) upon Ryan’s taking up the gavel.
“China, Canada, Germany, Mexico, and these others, they beat us on low rates, but not anymore,” Brady said. “They border adjust.”
The chairman said virtually every other country in the world has a system in place, where they take major taxes off of a product as it is exported to the United States and they slap a tax on products coming into their country from the United States.
Brady said the president is deeply involved with the chairman’s tax reform effort, because it lines up with his campaign rhetoric.
“President Trump gets it,” he said.
“He knows it is not a level playing field and American workers and American communities are really getting hurt by this, so we are having very good discussions about how to end the ‘Made in America Tax’,” he said.
“I am very encouraged with our talks with President Trump,” Brady added.
Helping Brady’s cause is the popular support for what he promises the Border Adjustment Tax achieves.
According to a confidential poll by Trump campaign pollster Tony Fabrizio and his partner David Lee that is circulating Capitol Hill offices and was made available to Breitbart News, 58 percent of the voters in 14 states key support the BAT, and 29 oppose it. Among Republicans, 80 percent support the BAT with Democrats split: 45 percent oppose and 39 percent support.
The poll asked: “(Some/Other) people say that they would prefer a tax code that incentivizes foreign-made goods imported and sold in American stores for lower prices. (Some/Other) People say that they would prefer a tax code that incentivizes American manufacturing of goods to be sold in American stores and exported throughout the world.“
Seventy-seven percent chose to incentivize American goods, and 13 percent chose to incentivize foreign goods.
The poll was conducted among 1,000 registered voters from Feb. 20 to Feb. 22 in 14 states and the District of Columbia. Fifty-four percent of the calls were made over landlines, and 44 percent were made on cell phones. The poll carries a 3.1 percent margin of error with a 95 percent level of confidence.
Brady’s BAT is not a small piece of the puzzle; it is the puzzle. It is estimated that the tax will reassign a macro tax burden by roughly $1 trillion, or about one-third of federal revenues.
The legislative lift alone is massive, given that this is the most significant restructuring of the tax code since President Ronald Reagan’s 1986 reform. That reform reduced the individual tax code to three brackets, lowered the rates, and eliminated hundreds if not thousands of tax breaks.
The BAT’s $1 trillion haul then allows conservatives to achieve long overdue items on their agenda, such as the full repeal of the tax on estates, lowering the tax rates on personal and business taxes, and elimination of the tax code’s infestation of tax loopholes written in for special interests.
Brady said the estimates vary, but it is safe to say that American businesses are sitting on $6 trillion in cash that they were unwilling to use to hire new workers or invest.
“Because of President Obama’s constant attack on the free enterprise system, businesses didn’t feel comfortable unleashing that investment,” he said.
“Under the Republican blueprint, we allow businesses to immediately write off from their taxes all their new investment, new buildings, new equipment, new technology, and new software,” the Texan said.
“We’ll bring all that investment off the sidelines and inject it right into the US economy,” he said. “That’s where you are going to see lots of growth as well.”
Under the current system, low American trade barriers and the tax rebate other countries offer on exports means that American companies have a solid incentive to move manufacturing overseas and then send their products into the United States as our competitors do.
Brady said the BAT equals out that disadvantage and fosters an environment where businesses are comfortable hiring and investing.
During the campaign, Trump promised to lower the business tax to 15 percent from its current 35 percent. This rate is one of the highest in the world and creates the conditions for lawmakers to give their friends tax breaks.
Were Congress to lower the business tax from 35 percent, there would be less reason to hire lobbyists to secure a tax loophole.
One other advantage of lowering the business tax rate is the estimated $2.5 trillion parked overseas by companies unwilling to pay 35 percent off the top when they bring those profits home–those funds suddenly become reasonable to repatriate, he said. “Those profits, stranded overseas, we want them reinvested in America in new jobs, new research, and new growth.”
The chairman said his goal is to have the bill marked up out of committee by the end of spring and signed into law before the end of 2017.
“You want to give the Senate plenty of time to act on their tax reform as well,” he said.
“After 30 years, the prospects of getting tax reform done this year are the best they have ever looked.”