To Compete and Win Worldwide, We Must End the “Made in America” Export Tax

January 18, 2017 — Blog   

Today, more than 160 countries around the world use some sort of “border adjustable” tax. The United States is not one of them. As shown on the map below, we are one of very few countries worldwide that still taxes the sale of our own exports. Why does this matter? Because this completely backwards feature of our current tax code gives foreign-made products a competitive advantage over “Made in America” goods, services, and intellectual property. 

WM_Graphic_Map-border-adjustable_v13-small-1024x683.pngCLICK HERE to expand the map.

Here’s how the map breaks down: 

In light blue, you have all the countries with “border adjustable” taxes, meaning the country does not apply this tax to the sale of their own exports. These countries make up more than 70% of the global economy. The group includes all of our major international competitors in Europe, Asia, and even here in North America with Canada and Mexico.

In red, you have the countries without “border adjustable” taxes. It’s our country and a small group of others such as Suriname, Angola, and Laos. Not to mention we are also in the company of countries like North Korea, Cuba, Syria, Iraq, and Afghanistan. Along with the United States, these and a handful of other countries do apply this tax to the sale of their own exports.

So, if a product is made in America, our nation’s antiquated tax code forces U.S. businesses to pay a “Made in America” export tax when that product is sold abroad. Not only does this increase the price of American-made products relative to those made in other countries, it serves as a direct incentive for businesses to move jobs, operations, and investments outside the United States. 

America’s major international competitors stopped taxing their own exports a long time ago – and for good reason. Now it’s time for our nation to do the same by ending the “Made in America” export tax. That’s exactly what House Republicans are proposing as part of our bold plan for pro-growth tax reform. For the first time, foreign imports and American-made products will be taxed equally in America.

Ending the “Made in America” export tax will bring our tax code into the 21st century, level the playing field for our businesses and workers, and make the United States a magnet for investment and job creation. Most importantly, it will help “Made in America” products compete and succeed anywhere in the world. 

SUBCOMMITTEE: Tax Policy