Rep. Kevin Brady, R-Texas, sought to convince conservative activists on Friday to rally behind a plan from House Republican leaders to tax imports instead of exports.
Brady, chairman of the Ways and Means Committee, argues along with House Republican leadership that the “border adjustment tax” must be included as a component of tax reform to make it through Congress.
“America needs to be competitive again because we’re not,” Brady said during a speech and question-and-answer session at the Conservative Political Action Conference, or CPAC, outside Washington. “Today, our farmers and our businesses are competing with one hand tied behind their backs. Our tax code provides tax breaks for foreign products over made in America products. We will end the tax on ‘made in America.’”
The House Republican plan, known as the border adjustment tax, aims to discourage import-intensive businesses by imposing a tax on their products consumed in America while making exported goods and services tax-free.
Brady and other supporters say this would encourage companies to make products in the U.S., and eliminate incentives for corporations to use complex schemes to shift their incomes to lower-tax countries.
But small businesses and retailers say the plan would raise their costs, forcing them to pass on that increase to the consumer, and potentially cause them to lay off workers.
President Donald Trump, who has not offered an official position on the border adjustment tax, spoke positively about it Thursday in an interview with Reuters and in a meeting with manufacturing CEOs.
“It could lead to a lot more jobs in the United States,” Trump told Reuters after meeting with the CEOs of Dow Chemical, General Electric, and other industrial giants.
Brady said he views the tax as a way to deliver the “America first” promise of Trump’s campaign in a way that doesn’t resort to protectionism or risk a trade war:
We are proposing to no longer sit idly by and watch jobs and plants go overseas. Our plan restores America as the best place on the planet to create that new job, to build that new plant. That message is why President Trump is now our president.
Treasury Secretary Steve Mnuchin told The Wall Street Journal this week that the Trump administration is working with House and Senate Republicans to reconcile differences over tax policy, with the goal of passing major legislation by August.
Some tax and economics experts worry the debate over the border adjustment tax could leave that timeline in peril.
“If the border adjustment tax lacks the necessary support to pass Congress, Brady and his colleagues should consider abandoning it—at least for now,” Stephen Moore, a visiting scholar at The Heritage Foundation who advised the Trump campaign on economic issues, wrote in a Politico op-ed published Thursday. “Otherwise, it risks further delaying tax reform.”
CPAC, the largest annual national gathering of conservative activists, runs from Wednesday to Saturday at the Gaylord National Resort and Convention Center in National Harbor, Maryland, just outside Washington.