Alan J. Auerbach
Posted on 03/19/2017 8:28:57 PM PDT by MarvinStinson
House Speaker Paul Ryan's ambitious tax overhaul relies on an import tax concept originally developed by a Berkeley economist who once advised Democratic presidential candidate John Kerry.
Alan J. Auerbach is the director of the Robert D. Burch Center for Tax Policy and Public Finance at the University of California, Berkeley. He served as an economic counselor to Kerry during his 2004 presidential campaign.
He also happens to be known as the godfather of "border adjustability," the linchpin of the tax reform plan that Ryan, a conservative Wisconsin Republican, is attempting to sell to the White House and push through the GOP Congress.
In a March 6 op-ed in the New York Times that Auerbach co-authored with Michael Devereux, a professor at Oxford University's Said Business School, he praised Ryan's tax overhaul and made a direct appeal to liberal critics of the Ryan tax plan.
"Critics, particularly those on the political left, have expressed concern that the tax isn't progressive enough," Auerbach and Devereux wrote. "But it promises to be more progressive than the current United States corporate tax system: Its burdens would fall squarely on the owners of corporate capital rather than — as happens to some extent now — on American workers, whose wages suffer from the flight of productive investment capital to lower-tax countries."
In an email exchange on Friday with the Washington Examiner, Auerbach said he first started writing about the concept of border adjustability in 1997. Ryan was elected to Congress the following year and 10 years later produced a tax reform proposal that included a "border-adjustable business consumption tax."
Auerbach, a registered independent, said he doesn't view a border tax as liberal or conservative, despite his belief that it could be more progressive because it would move the tax burden from workers to corporations.
"I view it as good tax policy," he said. "Given how bad the current corporate tax system is, and the weakness of the other proposed alternatives, I would hope that what I view as a sensible approach could get broad support."
Auerbach said that did not advise House Republicans on the formulation of the Ryan tax plan.
Congressional Republicans, and President Trump, largely agree on many elements of Ryan's plan, including lowering individual and corporate rates, and streamlining the tax code. But there is a big fight brewing over border adjustability.
Also known as an import tax, border adjustability would radically shift how the U.S. taxes imports and exports. Income that businesses earn on the sales of domestic goods would not be taxed, but income earned from the sale of imported goods would be taxed.
Republican opponents of the proposal, most prominent in the Senate, are looking for any edge they can find to derail it. And one argument they've landed on is that border adjustability is the opposite of what conservative tax reform looks like. Critics could use Auerbach's association with the proposal to drive that argument.
They also contend that it would jack up the prices of consumer staples that low- and middle-class families depend on.
"The border adjustment tax is regressive, hammers low- and middle-income consumers, and it does not foster growth. What it does do is grow the size of central governments," Sen. David Perdue, R-Ga., told the Washington Examiner in a statement provided by his office.
House Ways and Means Committee Chairman Kevin Brady chuckled when he was asked to counter claims that border adjustability isn't conservative policy.
The Texas Republican refers to the current tax system as levying a "made in America tax" on domestically manufactured goods because foreign countries hit American products with a value-added tax, something their exports aren't subject to by the U.S.
That puts U.S. exports at a competitive disadvantage, both at home and abroad. There's nothing conservative about that, Brady said.
"No one can defend the current tax code, that favors foreign products over U.S. products. Equal taxation is conservative policy. And, by the way, that's true competition — that always, in my view, accrues to consumers," Brady said. "Conservatives have never believed that there should be tax incentives to move American manufacturing jobs, research and headquarters overseas."
Supporters of the border adjustability import tax dismiss the critics who say it will cause the price of consumer goods to spike. As Brady explained, they believe foreign countries will adjust their currencies to account for the new U.S. tax policy, with prices remaining stagnant.
Major U.S. retailers disagree. They have formed a new trade association, Americans for Affordable Prices, aimed at defeating border adjustability. Many of the Republicans who oppose the provision hail from states where retailers are headquartered.
Republicans are set to take up tax reform after they clear legislation to repeal and replace Obamacare. Ryan has said his plan is for tax reform to be completed by the end of July, when Congress is scheduled to adjourn for its summer recess. Senate Majority Leader Mitch McConnell, R-Ky., said it could take longer to process tax reform in his chamber.
Trump, who has promised to renegotiate U.S. trade deals to encourage more domestic manufacturing, remains noncommittal on the border adjustability import tax.
Alan J. Auerbach
Rinocare is dead unless Trump fixes it MAJOR!!!Too much socialism!!!! Trump should have done the Bill and gotten Paul RINO out of the way!! BIG MISTAKE!!
bmp
Border Tax Adjustability is the way to go! This how we add an import tax to goods from China, Mexico, Japan and Germany.
It will encourage American companies to manufacturer in the US.
Plus it will pave the way for Trump to win the rust belt again in 2020 and govern for 8 years.
And balance trade properly. And bring military critical manufacturing back to US soil.
And provide living wages - properly - rather than through government mandate which does nothing but cause market distortions and long term poverty.
Wendle, I can agree with you, but how do you achieve that?
If Trump would have waltzed into Congress and laid down a ‘take it or leave it’ plan, I think Congress would have said no thanks.
If he seems to support this plan and it falters, he can come back with a better plan and not seem like he didn’t honor the House plan when it was on the table.
Then he hasn’t made enemies, and his plan can get a better fair shake.
I’m hoping we wind up with something like the Paul plan. It makes more sense to folks here. It seems to to the Conservatives in the House.
The Senate, who knows.
I don’t know what Trump really has on his mind here. Does he really want this, or is he posturing? I hope he’s posturing. If he isn’t, I won’t be very happy about it.
I want all of Obamacare repealed. The Ryan plan doesn’t do that. I’m not convinced it ever does, and holding off parts of it until years down the road is as flawed an idea as Obamacare was.
At this point it’s out of my hands. I’ll have to wait and see what happens. Then I’ll complain or congratulate.
Ryan deserves to go down in flames in any other attempt to continue his political career.
Beware the VAT. The Value Added Tax is how Europe tries to pay for all it’s Socialism. It is charged, at every step, in manufacturing and the consumer is the one who ends up paying more. Does anyone think that the border tax won’t be passed on to the consumer??? The companies will not be suffering......we, The People, will be the ones who have to pay, in the end.
Can we please get rid of RINO Ryan already?? Sheesh
Why is Paul Ryan shaping policy on Obamacare reform (instead of repeal) and now tax reform? Ryan is not the president - he’s the House Speaker, and his job is to fall in line with Trump’s policies and deliver votes for the legislation Trump wants, not the legislation Paul Ryan and former Kerry advisers want.
Why is Paul Ryan shaping policy on Obamacare reform (instead of repeal) and now tax reform? Ryan is not the president - he’s the House Speaker, and his job is to fall in line with Trump’s policies and deliver votes for the legislation Trump wants, not the legislation Paul Ryan and former Kerry advisers want.
My thoughts exactly. Excuse my French but WTF is going on?
Easiest way of doing that is eliminating the current income and corporate tax code and replacing it with a national sales tax. Everything and everyone would pay the same rate. Imports and domestic production would be charged the same tax rate and exports would be untaxed so they wouldn't get the double tax of US income tax followed by a foreign VAT tax.
But the elimination of the current tax code would eliminate the largest source of graft in Congress, so I don't see it happening.
No to Ryan Care.
Thanks, MarvinStinson.
Why is Paul Ryan shaping policy on Obamacare reform (instead of repeal) and now tax reform?
Ryan is not the president - he’s the House Speaker, and his job is to fall in line with Trump’s policies and deliver votes for the legislation Trump wants, not the legislation Paul Ryan and former Kerry advisers want.
Ryan is an evil puppet of the NWO...who wants the US Constitution destroyed. He needs to be gone!!! He is so evil, not unlike the alleged pedophile child-trafficker, Priebus. Pence is suspect also since the Flynn event revealed his best friend is a pedophile. Birds of a Feather flock together. The Pedo-ring—established by the Bush CIA inside the White House in 80s is still not disbanded. It has been stated that 1/3 (at least) of the Congress are pedophiles-—and that doesn’t include the “justices” who are the facilitators of the sodomy crowd to normalize vice in our culture-—to wipe our virtue and Christian ethics in children.
Only virtuous people can be free and create a civil society. Vice breeds vice and tears down cultures and destroys freedom. Just Laws are null and void if they promote vice since it will destroy virtue formation in children raised in a toxic culture.
I don’t think that Dr. Jonathan Gruber, the author of unconstitutional Obamacare, was ever up to speed with Congress’s constitutional Article I, Section 8-limited powers, regulating, taxing and spending for INTRAstate healthcare purposes not among those express powers.
And I suspect that Dr. Auerbach doesn’t know any more about Congress’s limited powers than Dr. Gruber does.
"Our citizens have wisely formed themselves into one nation as to others and several States as among themselves. To the united nation belong our external and mutual relations; to each State, severally, the care of our persons [emphasis added], our property, our reputation and religious freedom.” —Thomas Jefferson: To Rhode Island Assembly, 1801.
“Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” —Justice John Marshall, Gibbons v. Ogden, 1824.
"State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, &c. are not within the power granted to Congress [emphases added]." -Gibbons v. Ogden, 1824.
"4. The issuing of a policy of insurance is not a transaction of commerce within the meaning of the latter of the two clauses, even though the parties be domiciled in different States, but is a simple contract [emphases added] of indemnity against loss.” —Paul v. Virginia, 1869. (The corrupt feds have no Commerce Clause (1.8.3) power to regulate insurance.)
”From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states, or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. The same proposition, otherwise stated, is that powers not granted are prohibited [emphasis added].” —United States v. Butler, 1936.
I heard some analysts say that a border adjustment tax would be a more powerful stimulus to the US domestic economy than lowering tax rates, de-regulation, or the repatriation of corporate earnings held overseas.
If we enact all of those policies, it is off to the races - Reagan style growth.
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