Tuesday, February 14, 2017

Crain's Chicago Business Notes Business Backlash Against Roskam Over Border Adjustment Tax Plan

Crain's Chicago Business today shone the spotlight on the controversy caused by Peter Roskam's advocacy for the Brady Plan.  Noting my list of 622 companies located in Roskam's Sixth District of Illinois likely to suffer at his very hand, Crain's nevertheless gives air to Roskam's tall tale that the plan is needed to address border adjustments in VAT regions:

"'Peter's unfailingly polite, he's bright and he asks good questions,' says Woldenberg, who met with the Wheaton Republican last month. 'But he's toeing the party line. He continues to stick with a position that isn't supported by the facts.' Roskam's office replies that the two do 'disagree,' but the tax idea is solid. All Roskam wants to do is what 'nearly every country on earth' does. That is 'adjust its taxes at the border,' a spokesman says."

If I hadn't become accustomed to this kind of spewing of untruths, I might have been shocked.

I have documented on several occasions that Roskam's position is factually inaccurate, misleading and spurious. I originally wrote about misleading characterizations of VAT border adjustments  on January 12th, then incorporated into a post on WTO violations on January 15th, and finally reiterated it on January 18th.  I apologize for (endlessly) repeating myself, but the lies about this particular topic are repeated daily on TV by Kevin Brady, Paul Ryan, Peter Roskam or Devin Nunes or some confederate of theirs.  As I have also pointed out, the repetition of the Big Lie tends to make people believe it over time. This was proved by Joseph Goebbels and is a well-known technique in psychology.  I explained this on January 29th

I prepared the January 15th blogpost because I had an early meeting with Peter Roskam in his office on January 16th.  This private one-on-one meeting was my opportunity to explain myself. I have known Peter for several years and have a cordial relationship with him.  If you read my January 15th blogpost, you will see a detailed spreadsheet which shows in Scenario 1 a typical VAT scenario.  I showed this exact spreadsheet to him in that meeting.  Here's my description of Scenario 1 in that blogpost:

"Scenario 1:  VAT and Income Tax Model (EU/China).  This is the example I explained previously. This illustration uses a 20% VAT rate which is pretty typical, and results in $20 in VAT and $4.63 in income taxes as expected. [I chose the 20% rate for this scenario because I used in a previous example.] Please see that VAT in this example totals $20.  in the event that the last sale is an export sale, C would get back $10, and every party in the chain, including the government, would end up back where they started (zero).  The total corporate tax is the expected $4.38." [Emphasis added]

So Peter Roskam was shown the math directly by me in person on January 16th in his office.  He KNOWS he is lying when he contends that border adjustment needs to addressed to "level the playing field". That is just a contemptible lie. One can want tax reform or rationalize it on any of a number of grounds, but VAT envy is simply not a legitimate justification.  Period.

In addition, we also discussed a second non-controversial point - namely that corporate income taxes are due in VAT jurisdictions as well as in the U.S.  In other words, the fact that the U.S. taxes corporate income is a neutral factor competitively.  That is, if you look past our high rates.  I have repeatedly documented that the U.S. has the third highest corporate rates in the world, behind Chad and the U.A.E.  I also made this point to Roskam in that meeting. In plain English. He understands. . . and he ignores this fact.  Not convenient for his argument.  

So what gives?  Why does he lie and lie and lie?  He's not a bad guy, so why is he actively trying to deceive you and ram this plan through?  That's the $64,000 question.

My answer - Paul Ryan wants our money, and has ordered Kevin Brady to get our money, and Kevin Brady ordered Peter Roskam to toe the company line.  So it's politics.  And it's the future of our businesses, our jobs, and the fabric of our communities. I wish I could say the House Republicans care about this.  There is no sign they do.  Money money money. They want it and they are determined to get it. Our money, to be precise. Boeing, Disney and GE can keep their money, apparently.

Don't let Peter Roskam lie without bearing any consequences.  Why should he get a free pass? This is not about "disagreeing".  This is about intentional deception. Arguably, he's a public servant.  Hold him to account. Don't wait for the next election - do it now.  Attend Town Halls.  Call his office. Go to his office. Write letters to the Editor.  Protest.  Picket.

Peter Roskam cannot be allowed to lie with impunity.  It's up to you.

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