Mar 03, 2017

Congress Should Make Every Effort to Cut Spending – Not Raise Taxes on Consumers – to Make Tax Reform Possible

Post by Derek Yale

As the debate surrounding the trillion-dollar “border adjustment” tax on consumers and hardworking Americans continues, proponents of the measure insist that it is the only way to cut taxes for both businesses and the middle class and not add to the deficit.

But this isn’t true.

Lawmakers making these bold proclamations in defense of this harmful tax ignore that there are plenty of ways they could shrink our deficits. Closing tax loopholes and broadening the base will grow our economy, but lawmakers could also reduce wasteful spending to make this package happen.

In fact, Americans for Prosperity has already identified more than $2 trillion in wasteful spending, unnecessary programs, and corporate welfare that ought to be eliminated.

Some of these include converting multiple assistance programs for low income individuals into block grants to the states. This is something Speaker Paul Ryan of Wisconsin proposed in his “Better Way Plan” and would save $417 billion in federal spending over 10 years. Another option is to reduce the size of the ever-expanding federal workforce by 15 percent, or 300,000 employees. This would save taxpayers $229 billion over 10 years.

Cutting improper payment rates for federal programs in half would bring in $720 billion over 10 years.

AFP Vice President of External Affairs Chrissy Harbin put it best.

“Republicans have been calling for pro-growth tax reform and fiscal responsibility for decades – now is an opportunity to do both. There are trillions of dollars in corporate welfare, wasteful spending, and unnecessary programs that could be eliminated to clear the path to get tax reform done. Lawmakers should look at some of those options before asking consumers to chip in $1.2 trillion in the form of higher costs for clothes, gasoline, electronics, and other everyday goods. Millions of Americans voted for change; now it’s time for Washington to deliver on its promises.”

Congress could fix the tax code to deliver much-needed comprehensive tax reform that helps every American – without BAT. Every alternative should be considered instead of the prospect of taking a vote on a trillion-dollar tax hike.

Like we have said, the border adjustment tax is bad politics – and even worse policy.

I Don’t Know Any Other Way To Do It

AXIOS“House speaker Paul Ryan says the only way major tax reform will get done is if border adjustment is part of it to pay for massive tax cuts.” (Jonathan Swan, “Trump Not Expected To Endorse Border Adjustment Tax Tonight,” Axios, 2/28/17)

ROBERT GOULDER, TAX ANALYSTS: “Ryan has a blunt message for all these skeptics: If you want a low statutory rate and expensing, then you’ll need to suck up your objections to taxing imports. As he sees it, there’s no alternate path to tax reform. The long-term viability of the destination-based cash flow tax will certainly depend on a multitude of stakeholders becoming comfortable with that trade-off.” (Robert Goulder, “Paul Ryan Talks Tax Reform Permanence And Pay-Fors,”Forbes, 2/16/17)

FISCAL TIMES: “The proposed border adjustment is arguably the most revolutionary idea in corporate tax reform movement in decades and – if approved – would transform the corporate income tax code into something similar to the European value-added tax or VAT. Ryan argues that his plan is needed…” (Eric Pianin, “Why Ryan’s ‘Border Adjustment’ Import Tax Is So Controversial,”Fiscal Times, 2/21/17)

CNBC“Rep. Devin Nunes, R-Calif., said … that in his mind, there would be no tax bill without a border adjusted tax.” (Patti Domm, “Border Adjustment Tax Is On ‘Life Support,’ And Tax Reform May Come Later … And With Less Punch,” CNBC, 2/17/17)

NUNES: “I don’t know any other way to do it. We’ve long looked at this. We’ve had exhaustive hearing after hearing after hearing for eight years.” (Patti Domm, “Border Adjustment Tax Is On ‘Life Support,’ And Tax Reform May Come Later … And With Less Punch,” CNBC, 2/17/17)

NUNES: “This is the only way to leapfrog United States tax code in front of every other tax code around the world.” (Patti Domm, “Border Adjustment Tax Is On ‘Life Support,’ And Tax Reform May Come Later … And With Less Punch,” CNBC, 2/17/17)

CNBC: “Border Adjustment Tax Will Be Part Of Tax Reform, Chief GOP Tax Writer Says.” “The Republican’s Chief Tax writer, Rep. Kevin Brady, told CNBC on Wednesday he is ‘confident’ that the border adjustment tax will be included in the tax reform plan, despite some opposition to the controversial measure.” (Michelle Fox, “Border Adjustment Tax Will Be Part Of Tax Reform, Chief GOP Tax Writer Says,” CNBC, 2/15/17)

BRADY: “If you don’t have that in there, tax rates on our local businesses, small and large, will go up.” (Michelle Fox, “Border Adjustment Tax Will Be Part Of Tax Reform, Chief GOP Tax Writer Says,” CNBC, 2/15/17)

WALL STREET JOURNAL: “Border adjustment is essential to overhauling the tax code…, Rep. Kevin Brady (R., Texas), the plan’s chief architect, said Thursday.” (Richard Rubin, “As Tax Debate Heats Up, Lawmakers Struggle To Think Of A Plan B,” Wall Street Journal, 2/17/17)