Tuesday, March 28, 2017

Anti-BAT Coalition Publishes Video about the Impact of Proposed Tax Reform on Learning Resources, Inc.

I was featured in Politico today in an article about the BAT.  The video mentioned is embedded below.

"NO, WE DIDN’T FORGET ABOUT BORDER ADJUSTABILITY: The border adjustment tax in the House GOP’s blueprint remains the most controversial part of the tax reform debate right now, and there are signs that the framework is still struggling to gain traction. The latest: Rep. Mike Kelly (R-Pa.), a Ways and Means member who’s been publicly skeptical about border adjustability because of his history as a car dealer, flat out said he was opposed to the idea on Fox Business on Monday. (Full disclosure: Kelly was asked specifically about a border tax, but the conversation seems to be about border adjustability.) Americans for Affordable Products, the coalition opposing the border adjustment, also has a new video featuring Rick Woldenberg, the chief executive for an Illinois toy maker called Learning Resources. Woldenberg, who’s been a rather vocal opponent of the House plan, says that a border adjustment would make his business unprofitable."

Putting aside my fifteen minutes of fame, the part of Mike Kelly is really interesting.  As has been reported in this space, Republicans on the Ways and Means Committee have apparently been threatened by losing their seat on this powerful committee if they stop supporting the BAT.  Devin Nunes clearly has been very cooperative on this score . . . .  Kelly is a car dealer from Pennsylvania and is a Republican member of Ways and Means.  He has long been rumored to be against the bill, but now he's out in public and telling people on camera:

Yes, you heard that right.    When asked if he was "for a border tax", Kelly replied:

No, I’m not because you know what, I am a bill guy, Maroney Label, which I’ve watched for years on the side of a car, shows not only the equipment on a car and price of a car, but it also shows parts content. And when you look at global parts supplies, you know they come from all over the world. Sometimes little things built in one part of the world go in to big things built in Detroit and everything else. So, I always look at how it’s constructed. Don’t go flying off the handle. It’s not made here. I’m not buying it. You know what? If that’s the truth, you’re not going to buy very many things anymore because it takes the whole world now with that global supply chain to build the finished product. So, it’s incredibly important we understand how things are made as opposed to just making statements and then going back later on and saying, oh, I didn’t really understand that. You know what? Get your head out of that place where it’s so hard to breathe and look at things. Look at it.”  [Emphasis added]

Whoa.  He really said that.  So WHY did he say that?  Two theories:  First, he senses disarray and weakness in House Republican leadership (you know who I mean) and is playing the chess game out a few moves. He's getting out there first so he can claim the higher ground.

A second, perhaps more compelling theory:  He was TOLD to do this.  He's floating a trial balloon for Ryan and Brady.  If so, this is the leading edge of the death of the BAT.

Be still, my heart.

And there's other reason to believe it's cratering.  Look at this outpouring of negative press:

Chris Wallace:  "You've also have a big split in the Republican Party because Speaker Ryan wants this Border Adjustment Tax which would tax imports, not exports, and there are a lot of Republicans who say 'no way'".

Jim Crmaer:  "But you know what, if they're going to make the debate the border tax then we're going to be talking about this thing for a long time, it’s not going to work.

Bloomberg's Kevin Cirilli:  "But then you talk to members of the House Freedom Caucus, you talk to other conservatives in the Senate who feel that the Border Adjustment Tax is a non-starter issue. So, all of this of course comes on the backdrop as Russia hearings in the Senate and the House are going to continue and Republicans on those committees continue to raise questions. That of course could weaken this administration’s political capital as it looks to pivot to tax reform after a devastating loss on health care.

FOX Business Network’s Stuart Varney: “At this point, the Border Adjustment Tax Is the divide within the Republican Party, which Is putting the whole tax reform effort In jeopardy.

And as if that's not bad enough, there's this -

CNBC’s Ylan Mui:  “One source tells me that fiefdoms within the administration have been working on pieces of a tax plan, but there’s no cohesion yet, and there are three big questions that still need answers. The first one is border adjustment. The head of the House Freedom Caucus, and that’s the group that just took down health care, he doesn’t want it to be part of tax reform. Meanwhile, the number of Senators who are skeptical of it keeps growing. Second is whether corporations should be able to deduct interest payments, getting rid of that benefit is critical to financing the cut of the top line corporate tax rate from 35 to 20 percent, so the existential issue here is whether tax reform needs to be revenue neutral. Do any tax cuts need to be offset with revenue from somewhere else? Guys, mark your calendar, April 28th is the new date to watch. That's the deadline to pass a bill that would keep the government running through the end of this fiscal year, and that will give us clues about whether or not Republicans can actually work together.”  [Emphasis added]

So you have to wonder why Mike Kelly chose today to come out against the BAT.  To my knowledge, he is the first Republican on Ways and Means to take this stance directly in contravention of Kevin Brady (aww!).  What does it mean?  Stay tuned!


  1. Richard,
    great spot and great news. Thanks!

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