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Border Tax Critics Turn Attention to Supporting Overhaul

‘The way has been cleared for swift action on a middle-class tax cut’

The U.S. Chamber of Commerce expressed hope Thursday for “tax reform” this year. (Courtesy AgnosticPreachersKid/Wikimedia Commons CC BY-SA 3.0)
The U.S. Chamber of Commerce expressed hope Thursday for “tax reform” this year. (Courtesy AgnosticPreachersKid/Wikimedia Commons CC BY-SA 3.0)

Lobbying groups, including those in the Koch brothers’ conservative political network, spent millions of dollars and mobilized voters nationwide in an effort to kill the border adjustment tax proposal. They won.

After the Trump administration and Republican congressional leaders Thursday offered their broad outline for a tax overhaul proposal that nixed the border adjustment tax, or BAT, industry groups did not hide their glee.

But they also shifted immediately to throwing their support behind a tax code rewrite — giving the business community a more unified voice after the end of a policy proposal that had divided the membership of some of the biggest industry organizations such as the U.S. Chamber of Commerce and the Business Roundtable.

“By removing this costly element of reform, the way has been cleared for swift action on a middle-class tax cut that will put more money in the wallets of the American taxpayer,” Matthew Shay, CEO of the National Retail Federation, said in a statement. “Changing our outdated tax code is fundamental if we are to grow our economy, encourage investment and create jobs.”

The border proposal, backed by House Speaker Paul D. Ryan of Wisconsin and Ways and Means Chairman Kevin Brady of Texas, would have imposed a new levy on imports. It would have served as a pivotal pay-for to fund an estimated $1.2 trillion in tax cuts over 10 years.

Though other potentially insurmountable policy matters, such as those affecting popular tax write-offs, will remain as lawmakers and administration officials negotiate a tax overhaul measure, they may get a fresh, if only temporary, boost for their effort from the business community.

“Today’s announcement, and the unity of vision shown in it, bolsters our confidence that tax reform can be enacted this year,” said Neil Bradley, senior vice president and chief policy officer for the U.S. Chamber of Commerce.

Some exporters, for example, had supported the BAT idea. But retailers argued that the cost of the goods they import would explode, while conservative organizations such as the Club for Growth and the Koch-funded Americans for Prosperity argued against it on ideological grounds.

“We’re greatly encouraged to see leaders put this harmful provision behind them and start to unify around a positive vision for tax reform,” said Americans for Prosperity President Tim Phillips. “We will continue working with lawmakers and the White House to advance our positive vision for a tax code built on principles of simplicity, equitability, efficiency and predictability — without creating new taxes. We look forward to coming together to deliver on this great promise.”

The National Retail Federation sharply increased its spending on federal lobbying this year amid the BAT fight, reporting $5 million during the second quarter alone.

Phillips told CQ Roll Call in May, as the BAT appeared all but dead, that his grass-roots and lobbying group had invested heavily in derailing the proposal.

“It’s safe to say it’s been a seven-figure effort in total, so far,” Phillips said then. “It’s been more than just ads. Our state directors and activists back home have met with a number of House members.

Americans for Prosperity organized groups of activists to meet with their lawmakers, while other Koch-backed organizations — including its Hispanic-outreach Libre Initiative and millennial effort Generation Opportunity — also raised the alert.

The American Apparel & Footwear Association also cheered the official end to discussions of the BAT.

“The border adjustment tax was a bad idea looking for a place to happen,” said Rick Helfenbein, the group’s president. “Luckily it will not happen in the United States of America.”

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