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.
“[GOP Chairman Kevin] Brady explained they believe foreign countries will adjust their currencies to account for the new U.S. [retail sales tax] policy, with [retail] prices remaining stagnant.” (my brackets).
yeah right, that leftist idea is going to work sooooo well for the American working man and consumer. so we’re supposedly now encouraging foreign gov’ts to play games with their currencies based on taxing our people more.
so they’re going to voluntarily deflate their own currencies? man, these gopes and leftists work so damn hard coming up with these wicked schemes to fool and fleece us American working people (and foreign working people too). and in the name of conservatism? and President Trump is supposedly non-committal to this? may God please help us. looks like i’ll have to add this issue to my WH correspondence as well as ryancare.
please, just tariff the dumping, cheap labor exploiting, tax cheating, money manipulating, foreign exporters in American dollars, period. no more taxes on the American people. please Mr. President don’t fall for this.
Ryan craves to have his masterpieces affirmed. And the Democrats are well aware of this vulnerability.
Consultants work for anyone who hires them, where is there news here?
The border adjustment tax is pretty much exactly what you are describing, so why oppose it?
The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.
So Auerbach is in the clear, constitutionally, with the border adjustment tax, which is simply a form of import duty.
bookmark
There is no fixing obamacare or its clones. Complete repeal with NO replacement is what is called for followed by repeal or phaseout of all other federal connection to medicine and insurance is what would improve American Medicine. It would increase access to the maximum extent possible where people make decisions for themselves and would be progressively cheaper as the market does what the market does. Medical insurance would become actually insurance as it would no longer be needed to pay for normal needs but would be low cost with a high deductible(which would be less than the deductibles for so much of the current “regular” insurance) and reserved for major events. What we have now is NOT insurance. It is a prepaid medical plan that must also support hordes of supernumerary agents and bureaucrats and deadbeats.
From Beserkley? Nice.
The government should not be providing for “living wages” for anyone but government employees and those should number perhaps 20% of current staffing, a lot less than that if all the Unconstitutional and unnecessary Agencies and Departments were eliminated. The first four are the only ones that make sense.
The VAT is insidious because the ultimate payer of the VAT does not know how much he actually pays and it is too easy to jigger and raise. Stick with the taxes we have. I wish Trump could see the value in going to a low rate flat tax, my estimate is 9% of earned personal income with no exemptions, deductions, credits or any other modifications. It might have to be put on business, too because very few conservatives, even, understand just who it is that pays the business tax or that on net, it actually adds nothing to the revenue bottom line.
He isn't much of an economist, is he, if he doesn't realize that NO taxes are ever paid by corporations, and ALL taxes are paid by workers.
Perhaps the problem is that he (and other "economists" like him) believes that corporations have some separate revenue stream that comes from a source other than customers?
Nothing like Ryan going to a Berkley communist to redistribute my health and speech to others so they can vote against my interests and tell me how I should live “collectively” to put me in a good mood regarding my right of free speech vs theirs to riot.
Thanks for that compilation.
yep
; At no point in history has any government ever wanted its people to be defenseless for any good reason ~ nully's son
Nut-job Conspiracy Theory Ping!
To get onto The Nut-job Conspiracy Theory Ping List you must threaten to report me to the Mods if I don't add you to the list...
1. Eliminate ALL corporate tax.
1a. Eliminate ALL depletion allowances and depreciation allowances.
2. Eliminate ALL current IRS regulations.
3. Set the individual tax rate at 10% regardless of income.
3a. Perquisites at taxed at 10% of cost.
3b. Withhold at the rate of 11%, to get a refund you have to file taxes, but there is no legal imperative to file.
4. Tax ALL money coming into the country at 0% (yes, ZERO%).
5. Tax ALL money leaving the country at 10%.
Power to tax is the power to destroy.
What could possibly be more harmful than penalizing everyone whose efforts add even the slightest value?
Oh...Fred Thompson...I miss him
Fred Thompson was a good guy... but my post was Tommy Lee Jones.
:)
Ha...I always mix them up!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.