First Doubts about Border Adjustability

President Trump created a stir by dismissing as “too complicated” the border adjustability feature in the House Republican corporate tax reform. Yet a few days later his press secretarySean Spicer suggested the seemingly rejected border tax could pay for a Mexican border wall.   Meanwhile, the President suggested the dollar is “too strong” even though (1) Commerce SecretaryWilbur Ross boasted about Trump having talking the Mexico peso down 35% and (2) Martin Feldstein and other economists pushing border adjustability predict that the plan would push the dollar 25% higher.  To call border adjustability too complicated is starting to look like a huge understatement.  In the House Republicans ’ tentative “Better Way” plan, border adjustment means corporations could no longer treat expenses of imported materials, parts, or equipment as a cost doing business. Manufacturers of electrical machinery or plumbing parts could not deduct the cost of copper (36% of which is imported).  Retailers could not deduct the cost of imported goods. Refiners would pay a 20% tax on crude oil from Canada.Exports, by contrast, would not count as income for U.S. tax purposes. Big exporters might even qualify for a federal check. “Any border adjustment should includecash refunds for exporters, ” writes economist Alan Viard.   This “border adjustability” is said to be comparable to the way we exempt foreigners from our sales and excise taxes and other countries likewise exemp...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs