GOP ready to begin producing tax reform, border-adjustment tax is dead

Cohn Mnuchin Tax Plan FBN

While Republican lawmakers in the Senate struggle to flesh out their next step toward repealing ObamaCare, White House officials and GOP congressional leaders turned their attention toward tax reform Thursday, officially killing the proposal for a border-adjusted tax.

“We are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers … While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform,” a press release signed by Treasury Secretary Steven Mnuchin, National Economic Director Gary Cohn and Republican Congressional leadership said Thursday.

The border-adjustment tax, a proposed 20% tax on imports, caused concern among some in the business community, particularly retailers who rely on imports to manufacture goods. The Retail Industry Leaders Association (RILA) praised the decision to drop the BAT Thursday, calling it "victory for American families and businesses." Uncertainties related to how the tax may have impacted the U.S. dollar and consumer prices had divided lawmakers on Capitol Hill as well.

The note also outlines key proposals that will be contained in the legislation that Congressional leaders are set to begin working on, including lowering the business tax rate, reducing “tax rates as much as possible”, increasing capital expensing and making sure the legislation is permanent. President Donald Trump is on board with the agreed upon principles, according to the officials.

Another key part of the release Thursday involved tax reform timing. While previously, lawmakers had said to expect a bill by September, on Thursday lawmakers broadened the timeframe to the “fall.”

“Our expectation is for this [tax reform] legislation to move through the committees this fall, under regular order, followed by consideration on the House and Senate floors,” the release read.