NRF Urges Congress to Reject Border Adjustment Tax
The National Retail Federation (NRF) told Congress yesterday it should reject a proposed $1 trillion border adjustment tax (BAT) that it said would drive up prices for consumers and cost the economy jobs. In a letter to the House Ways and Means Committee, which held the hearing yesterday, NRF Senior Vice President for Government Relations David French said that, "the most important aspect of any tax reform measure is its impact on the economy, jobs and the consumer,” adding that consumer spending represents two-thirds of the economy and that retail supports one out of four U.S. jobs.
"Tax reform that shifts the burden of the corporate tax to the consumer would present an unnecessary risk to our nation’s economy,” French said. “Instead, we support a reform of the current income tax structure by providing a broad base and low rates. We believe that approach rather than a shift toward a consumption tax would bring the greatest economic efficiency and stimulate economic growth without causing the economic dislocations inherent in the transition to a new tax system.”
The hearing is focused on the “Better Way” tax reform, sponsored by Speaker Paul Ryan, R-Wis., and committee Chairman Kevin Brady, R-Texas. The Ryan-Brady plan would transition the United States from its current income tax system toward a consumption tax system. French said NRF studies show that that alone would cause retail spending and employment to decline for an estimated six years.
The plan also includes a proposal for a 20 percent border adjustment tax on imports, which French said would cause an even steeper decline in spending. The border tax proposal is expected to be the subject of an additional hearing next week.
Total Retail's Take: The NRF has been lobbying against a border adjustment tax for a while now. At NRF's Big Show in January, for example, speaker William Dudley, the Federal Reserve Bank of New York president and CEO, said the border adjustment tax would have “unintended consequences” for American consumers. The NRF also launched a two-phase TV and digital ad campaign against BAT. The first phase included "As Seen on TV Ads" that described the BAT as an “everything tax” for American consumers. The second phase involved three small business owners who told their own stories and conveyed their fears that the BAT would put them out of business. The NRF is also joined by several other groups like the Retail Industry Leaders of America in opposition to the BAT.