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How Trump’s Border Tax Will Be Paid for By US Consumers

By: Guest Contributor - Feb 20, 2017, 10:45 am
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Who do you think will cover the added tax costs? That’s right – us, the consumers.

By Patrice Lee

The United States tax code clearly needs reform, but one plan being proposed by House Republicans – border adjustment – will have a significant negative impact on consumers.

Imports Are Important

In our global economy, so many of the products we use every day are imported to the US – the Apple iPhone you’re checking Facebook on, the Nike tennis shoes you work out in, the Jose Cuervo tequila that’s in your happy hour margarita.

Under border adjustment, a company would be taxed based on where their products are sold, not where the company is headquartered. Supporters of the strategy say it’ll keep businesses from moving abroad to try to escape the United States’ high corporate taxes.

But the real result will be consumers paying much more to cover the added expenses.

Under our current tax code, companies pay a 35 percent corporate income tax on a product’s profit, regardless of if it’s made in the US or imported from another country. The tax plan from House Republicans lowers that rate to 20 percent, and only applies to profits made in the US, both of which are solid, pro-growth reforms. However, if border adjustment is included, US companies that import materials and products will no longer be able to deduct those costs from their taxable income, effectively slapping a 20 percent tax on everything that is imported.

Targeting More than Profits

Target is one of the top importers in the US. Say the company imports a table at a cost of $75 and marks it up to $100 when selling it to you. With other expenses and fees, they make a $10 profit. Right now, Target would pay $3.50 in corporate income tax based only on their profit. But if border adjustment were implemented, they’d be taxed on the $10 profit and the $75 they paid to import the table for a final tax bill of $17.

Who do you think will cover the added $13.50 in taxes? That’s right – us, the consumers.

If lawmakers really want to incentivize companies to stay in the US, they should make our tax code simpler and fairer for all. Companies who would face the new import tax would likely just raise their prices to cover the additional taxes, but consumers can’t afford to pay so much more on products we use every day.


Patrice Lee

Patrice Lee, a Senior Fellow at the Independent Women’s Forum, is the Director of Outreach at Generation Opportunity where she works to promote economic opportunity for Millennials.

This article was originally published on FEE.org. Read the original article.

Mexican Left Leader Attacks President Peña Nieto over “Submissiveness” to Trump

By: Elena Toledo - @NenaToledo - Feb 20, 2017, 9:22 am
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EspañolMexico's National Regeneration Movement doesn't seem happy with the President's allegedly passive relationship with US President Donald Trump. Leader of the leftist political party Andres Manuel Lopez Obrador — also known as AMLO — said Mexican President Enrique Peña Nieto does not want to confront US President Donald Trump, and has "acted submissively" to the country's detriment. The comments were made Saturday during a rally with followers. "If the government does not file a human rights and racial discrimination complaint before the UN, we will do it," the presidential candidate said regarding the Mexican government's dealings with Donald Trump, who plans to build a wall on the border and implement a strict protectionist trade tax. googletag.cmd.push(function() { googletag.display('div-gpt-ad-1459522593195-0'); });   Disagreement over trade relations and immigration resulted in the cancellation of a meeting earlier this year, which seemed to only further increase tensions. AMLO said he will hold an informational meeting in Chicago on Monday as part of his US tour to "defend Mexican immigrants" who are frightened by the current government's alleged deportations as well as discuss his platform for Mexico's 2018 presidential elections. Source: Animal Político

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