Today, Ways and Means Chairman Kevin Brady (R-TX) joined CNBC’s “Power Lunch” to discuss how ending the “Made in America” export tax is critical for pro-growth tax reform in 2017.
CLICK HERE or below to watch.
Why We Must End the “Made in America” Export Tax:
“Because we know what our competitors do. We know China, Europe, Mexico, Canada, others all border adjust their taxes. We don’t. But, we’re about the only country left that doesn’t, of major size. As a result, today, Chinese steel has a tax advantage over American steel. Mexican beef and autos has an advantage over American beef and autos. Foreign oil over U.S. oil. That can’t continue. This border adjustable tax is a very simple tax, but it’s powerful in the way it works.”
How It Will Work:
“This is a very simple policy. Is it consumed in the U.S.? Is your product or service consumed in the U.S.? If it is, it’s taxed equally [regardless of where it is produced] …
“So for the first time, we’ll be on a level playing field with China and our competitors. For the first time we will have eliminated any tax incentives to move jobs, or research, or headquarters overseas.”
“Once businesses understand it’s not a VAT, and you don’t have to track it transaction by transaction … At the end of the year a business adds up its export sales and doesn’t count it as income. At the end of the year, it adds up its import costs and doesn’t count them as expenses. That’s the border adjustable tax. It is that simple. Businesses already add those up, as you would imagine. By doing that simple but powerful thing, for the first time, exports and imports are taxed equally in America. We’re no longer taxing our exports around the world. Now we’re competitive again …
“It’s important we look at these bold changes we’re proposing and understand we don’t expect things to change on a dime. We’re going very bold so we can be competitive for a long time. We’re working with importers, for example, to design the transition on border adjustability, to make sure we’re accommodating their concerns. We’re growing this economy in a big way. We want imports and exports not only to be taxed equally in America. We think they’re equally important to our country. I’m confident that we can move this provision forward. At the end of the day, without it America will continue to have incentives for jobs and manufacturing to leave the country. None of us want that.”
How It Will Grow the Economy:
“We know we get one chance a generation to fix this broken tax code. We are determined to leapfrog into the front, the lead pack, the most pro-growth places on the planet to add that new job or make that new investment. That’s why the discussions we’re having are so critical …
“In fact, let me predict this. If we pass this blueprint, working with the Trump Administration in a very bold way, we’ll re-establish America as a 21st century magnet for new jobs and new business investment.”