Get Ready to Hear a Lot About 'BAT'

Proposed border tax is one of the thorniest issues with tax reform
By John Johnson,  Newser Staff
Posted Mar 27, 2017 1:44 PM CDT

(Newser) – With an ObamaCare alternative off the table for now, the White House is turning its attention to a new initiative, the first fundamental overhaul of the tax code in 30 years. Intense lobbying already is underway, with one of the most contentious issues the idea of a "border adjustment tax," or BAT. Here's where things stand:

  • The border tax would effectively levy a tax on products coming into the US and give tax breaks to companies sending products abroad. Proponents say it would protect US jobs, while opponents say it would raise prices of everyday goods for many Americans. See a primer at CNN.
  • As you might expect, companies such as Boeing, Merck, and Dow Chemical that export many of their products are big fans of the BAT, while heavy importers such as retailers Walmart and Target oppose it because they say it would drive up their prices, reports the Atlantic.
  • A huge ad war is unfolding. The National Retail Federation, for example, is running ads against the BAT, like this parody of an infomercial.

  • Paul Ryan and House Republican leaders are pushing for the BAT, but their Senate counterparts generally oppose it, reports the the Washington Post. Conservative Tom Cotton, for instance, called it "a theory wrapped in a speculation inside a guess," in this op-ed at USA Today. In a possible hint of compromise, the Post notes that Treasury chief Steven Mnuchin has suggested that some products or industries could be exempt, without offering details.
  • President Trump himself sounded skeptical of the tax initially but might be warming up. "Anytime I hear border adjustment, I don’t love it," he told the Wall Street Journal in January. In February, however, he told Reuters that it "could lead to a lot more jobs," and on Sunday, Reince Priebus said Trump thought a border tax could even "the playing field between our country" and others, per Fox News.
  • The success of the BAT hinges on the economic premise that it would strengthen the US dollar, though there's a fair amount of skepticism about that, notes Business Insider. A more in-depth analysis, which takes note of "significant confusion and uncertainty" about how exchange rates might respond, is at Real Clear Economics.
  • The European Union might sue if a border tax goes into effect, reports dw.com. Canada isn't a fan, either, notes Fortune.
  • More broadly, the GOP's failure to repeal ObamaCare complicates tax reform, because Republicans were relying on savings from the ACA's elimination as part of their calculations. The New York Times delves into the thorny legislative consequences, which mean that Republicans might have to work more closely with Democrats.
(Read more tax reform stories.)

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