Donald Trump wants a simple plan that could dangerously deepen the deficit. Paul Ryan advocates a complex new regime that even wonks strain to explain, but mainly pays for itself. The shared goal of encouraging the world's corporate titans to create jobs and build factories in the U.S.—to restore our dominance as the colossus of exports—is setting the White House and Congress on a collision course.
The Republicans in the House of Representatives, led by Speaker Ryan, are championing a novel-as-they-come, intricately crafted measure known as "border tax adjustment" (BTA).
President-elect Trump famously shares their goals, but wants to do it his way. He advocates keeping things basic by using a combination of steep cuts in U.S. corporate tax rates and the threat of stiff tariffs to lure landmark investments stateside. In an interview with the Wall Street Journal on January 13, published online late Monday, Trump slammed his party's plan, declaring, "Any time I hear 'border adjustment,' I don't love it," and assailing the Ryan-backed proposal as "too complicated."
The House GOP Plan
Trump isn't alone in denouncing the House proposal. Many of America's largest importers, including retailers, energy producers, and Koch Industries, whose owners Charles and David Koch are big Republican contributors, strongly oppose the BTA.
Despite the shower of brickbats, the BTA does offer major advantages versus the Trump plan. Assessing its virtues requires studying how it actually works—no easy task. The BTA is not a direct tax on the dollar value of goods that are imported, coupled with a credit for products that are exported—that would be a classic value-added tax, of the kind deployed by virtually every country except the U.S. Instead, the BTA is an all-American invention. It provides all incentives through exclusions and deductions from the U.S. corporate income tax.
The Republicans in the House of Representatives, led by Speaker Ryan, are championing a novel-as-they-come, intricately crafted measure known as "border tax adjustment" (BTA).
President-elect Trump famously shares their goals, but wants to do it his way. He advocates keeping things basic by using a combination of steep cuts in U.S. corporate tax rates and the threat of stiff tariffs to lure landmark investments stateside. In an interview with the Wall Street Journal on January 13, published online late Monday, Trump slammed his party's plan, declaring, "Any time I hear 'border adjustment,' I don't love it," and assailing the Ryan-backed proposal as "too complicated."
The House GOP Plan
Trump isn't alone in denouncing the House proposal. Many of America's largest importers, including retailers, energy producers, and Koch Industries, whose owners Charles and David Koch are big Republican contributors, strongly oppose the BTA.
Despite the shower of brickbats, the BTA does offer major advantages versus the Trump plan. Assessing its virtues requires studying how it actually works—no easy task. The BTA is not a direct tax on the dollar value of goods that are imported, coupled with a credit for products that are exported—that would be a classic value-added tax, of the kind deployed by virtually every country except the U.S. Instead, the BTA is an all-American invention. It provides all incentives through exclusions and deductions from the U.S. corporate income tax.