House Republicans brought the misery of the Border Adjustment Tax proposal on themselves. They have no one to blame but themselves. This is entirely a self-inflicted injury borne of shallow thinking and a bullying mentality.
And I say that as someone who devoted a considerable amount of time and energy since 2008, not to mention financial support, to help the Republicans gain control of the House and keep it. This is our fine reward for putting fiscal conservatives in charge. I don't know who's crazier, them for putting forth this plan, or me for supporting them.
Of course, there was no indication that this kind of lunacy was possible or contemplated. Shame on me for thinking of Republicans as friends of business. Or of job creators.
To recap, the argument against the Border Adjustment Tax, in pithy shorthand:
1. The tax base (formerly Net Taxable Income) is now a nonsense number. As a result, tax outcomes are random and bizarre. Companies with exactly the same model, structure, payroll and profitability will face spectacularly different tax bills. This is GROSSLY unfair.
2. Tax bills (as opposed to tax rates) can skyrocket to multiples of earnings for many importers and retailers. These companies employ many, many thousands of Americans. Some other companies may see their tax bills shrivel to zero despite making huge profits. YOUR personal tax bill will not shrivel to zero, trust me. All concepts of tax equity are destroyed under this proposal.
3. The "theory" behind the law is that the dollar will skyrocket in value and importers will save enough from renegotiated contracts to pay their sky high new tax bill. Seemingly the only people who believe this are the people putting forth the law. And who makes a $1.2 Trillion bet (the value of the BAT) on the theories of two obscure and condescending economists? Please, not with my money.
4. Most companies affected by this law are small businesses. More than 97% of U.S. importers are small businesses. The projected incremental tax, 20% times $643 Billion (the value of 2014 imports by U.S. small businesses) exceeds the projected $1.2 Trillion value of the BAT. In other words, Kevin Brady has invented a tax on small businesses to ENTIRELY pay for his new tax regime.
5. Many people reject the notion that dollar appreciation pays for this scheme, including me. In the absence of these savings, we will all have to raise prices on . . . you. This plan will unleash an inflationary firestorm on America.
6. The BAT arguably creates a financial incentive to automate your business. The improved terms on CapEx, plus the ability to recapture up to 75% of the expense of each terminated employee, will be a great temptation for companies put immediately into distress by the BAT. Awesome, we'll be working for robots soon.
So it's time to confront the House Republicans with the reality of this awful law. Kevin Brady's "listening mode" is only for the naive and the gullible. He has no intention of listening to anyone except Paul Ryan and himself. So you need to MAKE them listen. Use the simple arguments above.
It CAN be done. Check out this incredible story about Peter Roskam. Watch the videos. He is the Chair of the Tax Policy Committee under Kevin Brady and is a key player in this controversy. He also supposedly has a safe seat, but how safe now?
I've met with Roskam and to judge by his recent utterances, my January 16th meeting didn't move him (yet):
"The Illinois Republican said border adjustment, which the Tax Foundation estimates would generate $1.1 trillion in revenue over the course of a decade, is one of the few options 'that don’t get you into a trade war, for example.' 'When it comes down to it, the more people look at border adjustments and what we’re proposing, the more they say, ‘Oh this comprehensively makes sense, I understand this, this gets us the growth that we need,’ and I’m willing to do this hard work and take whatever criticism that comes now that I see that this is really the better pathway,' he continued." [Emphasis added]
My mother would not be proud of me if I told you what I thought of this remark.
Peter Roskam and his Republican ilk need to HEAR from you. Go to Republican Members' offices and picket if they won't meet with you. Attend public meetings and make the Republicans defend this terrible law. Call the press to watch the spectacle. Film the Republicans running away from constituents exercising their First Amendment rights - and then post the videos on YouTube and send me a link.
Roskam and Brady and the rest of the tone deaf House Republicans need to learn, quickly, who they work for. Of course, we'd be happy to hold them a spot on the bread line.
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