Thursday, March 2, 2017

Pro-BAT Group Responds to NRF Commercial with Lies

So now the battle moves to videos and commercials.

The National Retail Federation is going to launch this commercial on Saturday:

In response, the American Made Coalition offered up this pack of lies:

The pro-BAT folks are liars, plain and simple.  This includes Peter Navarro, Paul Ryan, Kevin Brady and anyone else that asserts that there is anything like a "Made in America" tax.  That imaginary tax is a paranoid fantasy and has no basis in fact.

Here are the FACTS:

a.   The pro-BAT folks are pointing to VAT systems in other countries and claiming that VAT systems put American companies at a disadvantage.  This is completely WRONG.

    1.  VAT is a consumption tax.  It is paid by the end consumer, not by anyone in the middle of the chain of distribution.  ALL products that are at the start of a chain of commerce are subject to this tax. So, when "we" export products to VAT jurisdictions, our products are in fact taxed, but so are local products that we compete with.  A buyer of our products (an importer over there) pays VAT on our goods, but would ALSO pay the same VAT on local goods purchased in lieu of importing from us. That's a level playing field.  I have provided actual VAT math again and again in this space.  There is no way to profit from VAT, and no product on either side of a border gains or loses with a VAT.  It is a tax paid by consumers in lieu of personal income tax.  That's it, period.

    2.  It is true that products coming into this country are untaxed.  But likewise American-made products sold in competition with imported goods are not taxed. Again, level playing field.

The story told by the pro-BAT folks leaves out half the story, namely what happens to everyone else.  All products are treated equally in both directions because the tax is a consumption tax.

b.   Be careful what you wish for.  Is it true that because everyone charges VAT besides us (and Somalia), we are somehow "falling behind"?  Does that really follow logically?  If you see ten people jump off a cliff, should you jump off the cliff, too? Is that a winning strategy?  How is our standard of living here compared to all those VAT jurisdictions we are so jealous of?  Have we even properly evaluated the arguments against VATs in this debate?  The answer is no.

c.    The pro-BAT commercial confuses consumption tax concepts with income tax, with the intention to confuse the viewer.  They toss in, as a side note, the lowering of corporate rates.  But the thrust of the BAT is revenue-raising. How does the math work?  They want small importers to pay the whole bill ($1.2 Trillion over ten years), and intend to reward the largest U.S. companies by taking their tax rate down to zero.  That's House Republicans' idea of "tax equity".

By "leveling the playing field", the Border Adjustment Tax schemers are going to tax the crap out of you.  The folks that paid for this commercial will see their tax bill shrivel to nothing because they are big exporters and big companies (Fortune 500 monoliths).  The workings of the BAT causes those companies to pay NOTHING.  You will continue to pay, and our company will die.  The commercial is designed to convince you that this is a good idea.  No, better than that - that you are in danger, and good ole' Congress is here to save you!  Hurray!!

I will more fully examine these issues shortly to explain how the BAT double taxes imports and make exports tax-free.  Perhaps good for exporters but bad for consumers.  You are a consumer. The pro-BAT people sniff at this but this is reality.  When Best Buy's taxes go up to triple earnings, do you think they will continue to sell TVs at low prices?  Who will have to pay more for TVs?  This is terrible public policy.

One last thought - the BAT is trade policy masquerading as tax policy.  Do you think for one moment that other countries won't retaliate?  What if they all adopt this stupid plan themselves? Whoops, there goes any advantage!  What advantage, you say? The BAT is a scam to fix the game so Americans always win.  That idea is outmoded and stupid.  It will never work, and coercing the rest of the world to bend to our will is an 18th Century notion. If you believe it, you are delusional.

I hate to be the bearer of bad news. Wake up and smell the coffee.

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