Congress should focus on income tax reform, not BAT, according to the National Retail Federation.
The National Retail Federation is urging Congress to reject a proposed border adjustment tax that would drive up the price of imported merchandise, saying the measure would force consumers to pay the cost of lowering taxes for large corporations.
“The solution for reducing the corporate tax rate should not be to shift the tax burden to individuals and families through the imposition of a consumption tax,” NRF Senior Vice President David French said in a prepared statement. “Since the overall purpose of pro-growth tax reform should be to improve the standard of living of the American people, it would be counterproductive to include a consumption tax in that plan.”
French’s comments came in a letter to the House Ways and Means Committee is now hearing how tax reform would affect individuals and families. The hearing is part of a series of sessions, following one last week on how reform would affect small businesses.
IMPORTED GOODS
The 20% border adjustment tax on all imported goods that would be created under the “Better Way” tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and Ways and Means Committee Chairman Kevin Brady, R-Texas, would effectively move the U.S. toward a consumption tax structure rather than the current income tax structure.
French said NRF members would have to raise prices approximately 15 % to break even under the new tax, and that NRF estimates show the average family could pay up to $1,700 more each year.
“Hardest hit would be low and middle-income consumers, especially those on a fixed income,” French said.
Congress should reject the BAT proposal and focus on reform of the existing income tax system by eliminating deductions and exemptions that benefit only a few industries and using the revenue saved to reduce rates for all businesses, he said.
“The retail industry is a strong proponent of income tax reform,” French said. “We believe that income tax reform that lowers the rates and broadens the base can provide economic growth for the economy as a whole and can be good for the American consumer. … We urge you to reject the border adjustment tax and adopt an income tax reform proposal that does not shift the tax burden to consumers.”