The Retail Industry Leaders Association (RILA) blasted the idea of a 5-year phase-in of the border adjustment tax (BAT), which was floated by House Ways and Means Committee Chairman Kevin Brady (R-TX).
The BAT would modify the tax code to require companies that sell products in the United States that are produced overseas to pay an income tax. U.S. companies that produce products that are sold overseas would also not have to pay an income tax, because the products are not sold in the United States.
The income tax would apply to products made and sold in the United States as well as products imported from overseas and sold here. Currently, only companies that make and sell a product overseas must pay income tax.
The BAT proposal has been widely criticized by RILA and others. Brady, speaking at an event this week, suggested perhaps a 5-year phase-in would be more palatable.
“Forcing consumers to pay more so that some profitable companies can operate tax-free is no better of an idea in five years than it is today,” Brian Dodge, senior executive vice president for public affairs at RILA, said. “The result will be the same—higher prices on food, gas, prescriptions, electronics, clothes and thousands of items American families need every day.”
RILA officials said the theory that that the BAT will result in the dollar appreciating 25 percent is folly.
“There are substantial reasons for believing that [full currency appreciation] will not occur, especially in the short run, but even over medium to long run timeframes and therefore it is not worth the risk of attempting it,” a recent report by macroeconomics firm Capital Economics said.