OPINION:
As we celebrate a New Year, it appears the new Congress has made its own New Year’s resolutions. Unlike the many resolutions Americans make this time of year, it seems Congress is committed to keeping this — and it should wake consumers from their post-holiday food coma. Hoping nobody would notice, they’ve have resolved in their fiscal “Blueprint” to give major tax breaks to corporations, while paying for it by creating what amounts to a new Consumer Tax on every American.
Congress calls it a “border adjustment.” They are hoping both consumers and rank and file members of Congress wouldn’t give this shell game a second look.
Speaker of the House Paul Ryan and House Ways and Means Committee Chairman Kevin Brady are right when they say our country has “a once-in-a-generation opportunity” to make significant reforms to our nation’s tax system. However, in doing so, the interests of the American consumer must be paramount. More specifically, hardworking Americans — particularly lower-income consumers — should never be forced to backstop corporate tax cuts.
Unfortunately, a key provision of their tax reform proposal will do exactly that.
What lies at the heart of the Republican reform package is a border adjustability tax — what the U.S. Consumer Coalition calls a “Consumer Tax” — a provision that aims to offset the loss in tax dollars when corporate tax rates are slashed from the current rate of 35 percent. The proposal adds taxes to imports and removes them from exports to spur domestic production of goods — a laudable goal.
A consumption tax, which this new reform package effectively creates, is not necessarily a bad idea, but it must be accompanied by reductions in the individual income tax for those consumers. If you do not reduce or eliminate the individual income tax burden, the border adjustment is simply a tax increase on hardworking American consumers. That philosophy is in direct conflict with the historical platform of the Republican Party.
When elected officials advance a tax reform proposal that reaches even deeper into the pockets of consumers, while filling the pockets of America’s largest corporations, it reveals a level of disrespect for the same constituents who elected them to be their voice in Congress.
While we applaud efforts to promote American manufacturing, what advocates for the plan omit is the onerous consumer tax that will undoubtedly be placed on all shoppers, regardless of where they live or how much money they make. American shoppers will have no choice but to pay higher prices for everyday items like food, clothing and gas, while corporations get a massive tax cut. It’s the poorest among us who will suffer most, as a greater share of their income will go toward buying life’s most basic necessities.
What is surprising — and even encouraging when it comes to this scheme — is that many of the same companies that will benefit from corporate tax reform stand against the proposed border adjustment provision.
Recently, more than 80 national and state associations representing small and large businesses sent a joint letter to the House Ways and Means Committee signaling their concerns with the border adjustability tax, writing: “Companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods, which would in turn likely result in reductions in employment, reduced capital investments and higher prices for consumers.” While consumer advocacy groups and industries don’t often see eye to eye, we all agree that this consumer tax is bad for America.
Feelings about the incoming administration aside, President-elect Trump earned the support of “Middle America” because he recognized the inequality that results from a rigged economic system that too often favors the wealthy at the expense of the masses. In too many communities across the country, businesses are closing, prices are rising and wages are falling. It’s simply getting tougher for families to make ends meet.
As 2017 gets underway, the most important resolution lawmakers can make for their constituents is an overhaul to our burdensome and complex tax code, but they need to do it without trampling the interests of American consumers. By removing the proposed border adjustment provision, Washington can send a signal that they hear the frustrations of overworked and overtaxed Americans. In other words, by saying “No” to the consumer tax, they can show that, in the New Year, they resolve to stand with American consumers.
• Brian J. Wise is president of the U.S. Consumer Coalition (USConsumers.org).
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