Kohl’s CEO Kevin Mansell said Speaker Paul Ryan’s border adjustment proposal makes no sense and will cause consumers to pay more for everyday products.
“From a perspective of running a business we will pay a much higher effective tax rate and we are going to have to find ways to navigate that,” Mansell told the FOX Business Network’s Maria Bartiromo.
He said one way to do this is by raising the price of everyday products.
“For the most part a core item of Kohl’s and a private brand which might go out the door today at $10 is suddenly going to start costing $12 and $12.50,” he said, adding that the impact on name brand products would be significant. “We have a great new brand introduction this year, Under Armour, which we love, and those products are going to go up in price a lot.”
President Trump has promised corporations a significantly lower tax rate, but in Mansell's opinion, it would not offset the impact of higher prices.
“Our effective tax rate with a border tax is something in the range of 80%, up from 38% right now. So there’s the business side of that which doesn’t make any sense but I think frankly, I think legislators have to think about it from a voter perspective and a consumer perspective which is higher prices doesn’t make any sense,” he said.
When asked whether a border adjustment tax would result in more products being made in the U.S., Mansell said while it’s a good small scale opportunity, it’s not an industry we want American’s to work in.
“It is an entry level kind of industry and it belongs where it is now so I don’t suspect that would happen and we don’t have alternatives,” he said.