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MAY 2017
|
THINK
E
verybody loves tax reform.
At least, that’s the
conventional wisdom in
Washington.
And what’s not to love? The tax
reform plan being discussed in
2017 involves lowering corporate
tax rates to 20-25 percent,
immediate expensing for capital
expenditures, and repealing
the much despised “death tax,”
which imposes an absurdly high
inheritance tax on the transfer
of wealth and family businesses
between generations.
These are all long overdue
and all promise to make our tax
system fairer, simpler and more
internationally competitive.
But there’s a catch.
To offset the lost tax revenue that
Uncle Samwill no longer collect
because of lower tax rates and
other measures, including other
provisions not mentioned above,
the House Republican leadership
is also proposing to “border
adjust” all corporate income
taxes.The Border Adjustment Tax
(BAT) is estimated to raise $1.2
trillion over 10 years. It does this by
denying the current deductibility
for cost of goods sold (COGS)
when those costs are associated
with imports, while excluding all
export and foreign-license revenue
from income taxes.They are
proposing other measures to offset
revenue loss, too—like removing
the deductions for interest—but
this BAT is the big one.
Exporters make out well.
Tax-free income seems
pretty nice. But what does
this mean for importers?
In plain English, the cost of
every imported item or input
(fabric to manufacture clothing,
for example) would increase by
20-25 percent (depending on
your company’s corporate tax
rate). Although details had not
yet been released at press time,
the House Republicans’ “A Better
Way” tax proposal makes it clear
that “products, services and
intangibles that are imported into
the United States will be subject
to U.S. tax regardless of where
they are produced.”This would
tax everything you import to sell,
including bags and totes, apparel,
drinkware, writing instruments
and electronics, as well as many
things you use that are produced
using imported goods, such as
What The Border
Adjustment
Tax Means To
Your Family
And Business.
by
Stephen Lamar
Speak Up,
Speak Out Now