Walmart and Target are joining up with more than 100 other retailers under the banner Americans for Affordable Products to fight Republican plans for a “border adjustment tax” as part of tax reform. The border tax would in effect impose a 20% levy on imported goods in an effort to encourage job creation in the U.S. (and also pay for The Wall). But opponents say the tax would be paid by Americans in higher prices. The new coalition intends to drive home the latter message.
The problem is that if you remove the border tax – estimated to bring in $1.2 trillion over 10 years – the GOP corporate tax reform plan quickly unravels. That money is key to reducing the corporate tax rate. And it’s far from clear legislators can find another way to offset such a huge sum.
That’s one reason why early hopes of a quick win on tax reform this year are now fading. As Senate Finance Chairman Orrin Hatch told the U.S. Chamber of Commerce Wednesday, Republicans agree on the “fundamental issue and principles” for tax reform, but there are questions about the “design and detail” that have to be worked through. Translation: don’t hold your breath. Given all the distractions facing the new administration, as well as the deepening partisan warfare in Washington, it’s hard to see how this happens soon… if at all.
But Republicans could still opt for a simpler deal on a temporary tax cut for repatriated corporate profits – perhaps with some strings attached requiring the money go into job-creating investments. That’s why Apple CEO Tim Cook, whose company has a massive $246 billion locked overseas, said in his earnings call this week that he remained optimistic “that there will be some sort of tax reform this year.”
In the meantime, companies are continuing to dance to Trump’s tune. Samsung Electronics said it may build a U.S. plant for its home appliance business.