I think we can count on him to actually get things done.
Instead of Obama's barrage of pie-in-the-sky boasts.
Homer Simpson "MMMM Sky Pie"
Posted on 02/21/2017 5:01:01 AM PST by davikkm
A group of chief executive officers are praising House Republicans' proposed border-adjustment tax as the debate escalates.
Border adjustability, which would subject imports to U.S. tax and exempt exports "is consistent with the tax policies of nearly every other country in the world, and it would effectively end the 'Made in America' tax that creates an unfair advantage for foreign-based companies at the expense of U.S. jobs and economic growth," the CEOs wrote in a letter to congressional leaders Tuesday.
Sixteen business leaders signed the letter, including the CEOs of Boeing, GE, McIlhenny Company, Pfizer and S&P Global. The chief executives' businesses are members of the American Made Coalition, a group that launched earlier this month to support the border-adjustment tax.
The border-adjustment proposal is a key part of the House Republicans' tax-reform blueprint, which is serving as the starting point for legislation that the House Ways and Means Committee is writing.
(Excerpt) Read more at thehill.com ...
The sample of CEOs is far from random and far from objective. I want cheap imports.
They complained about Trump wanting to put a huge tax on people who left the country and tried to ship back in so there solution is to tax everyone?!? This is dumb, do it Trump’s way, use it as a threat and only tax them if they leave. What’s stupid party
Imports will still be cheap after the tax. I want cheap human imports to STHU.
Steve Forbes is against it so it must be a pro American idea. Free Traitors™ can pack sand.
We, not a lot of detail here. Why is it an a adjustable tax? What is the rate? Is it applied across the board to everyone or different sectors? Who is charged with “adjusting” it?
I think we can count on him to actually get things done.
Instead of Obama's barrage of pie-in-the-sky boasts.
Homer Simpson "MMMM Sky Pie"
If it were up to me I would put up a simple 20% across the board import tariff. This would promote domestic industry and raise federal revenues which could be used as a foil against those Democrats that lament income tax rate reductions. win-win-win.
It is not a separate tax. The “rate” is whatever the corporate profits tax rate is. Basically, it excludes foreign sourced income from the corporate income tax and it excludes foreign payments for goods from tax deductible business expenses.
So if a business sells $100M of product overseas at a $20M profit, it saves the corporate income tax that it would owe. At the new proposed income tax rate of 20% (in the House bill) it would save $4M. This is an incentive to manufacture here and export the product and has the same effect as other places like the EU, China, and Japan when they “credit” their exports with the VAT tax their manufacturer would have to pay if sold in their home countries.
If a business imports $100M of wholesale products and then retails them here in the US for $120M, their profit is only $20M because they get to deduct the cost of goods sold as a business expense. They pay 35% of $20M profit or $7M in corporate income tax. Under this border adjustment tax they would not be allowed to deduct the $100M of imported goods as a business expense, making the entire $120M “profit” and then pay $25M in corporate income tax (20% of $120M). They would pay $18M more in corporate income taxes than under the current scheme, which would be similar to how other countries add a VAT tax to American goods. $18M / $120M sales would equal 15% VAT. Their supplier would need to reduce wholesale prices to less than $100M or the retailer would need to increase prices to more than $120M to still make a profit. So the price we pay for imports would go up.
American producers would save taxes on exports which they could use to lower prices at home, making American made goods cheaper both here in America and abroad. Imported goods would be more expensive here (but not the full 15%), but to compete they might need to increase prices in their home countries to make up for the reduced profits off American sales.
Make imports ~10% more expensive and American made goods ~10% less expensive. This all sounds like a good idea to me.
I would even go further: break down foreign payments into three categories — raw materials, finished goods, and services. Allow raw materials like petroleum products to be expensed as they currently are. That would prevent gas prices and heating oil from going up due to imported oil. For “services”, ie “wages” paid to foreigners in other countries, collect the FICA payroll taxes. People seem to forget that outsourcing of labor has a siphon effect on the Social Security and Medicare programs funded by wages on Americans. Requiring American business to pay the payroll taxes on those jobs they outsourced seems like a modest request.
Tariffs can be done by the POTUS without the Congress. Leveling the playing field by changing what qualifies as a business deduction and what foreign income is counted as “income” for tax purposes are changes only Congress can make.
I think this is a good approach, except I would exclude payments for raw materials and include payments for services on the “foreign business expenses” side. Insist on the new corporate tax rate to be 15% instead of the House 20%, though.
This leaves the whole tariff issue as a tool for Trump to use in bilateral trade agreements ON TOP OF the corporate income tax leveling border adjustments above.
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