(Bloomberg) Republican leaders conceded on Thursday that the border-adjusted tax doesn’t have the support to continue to be part of negotiations to overhaul the tax code.
A statement Thursday from the so-called Big Six—which includes Ryan, Brady, White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch—said due to the unknowns associated with the border-adjusted tax, the group “had decided to set this policy aside in order to advance tax reform.”
"And 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 protecting American jobs and the U.S. tax base," according to the statement.
House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady had been telling Republicans prior to the statement’s release that the controversial border-adjusted tax on imports would no longer be part of tax-legislation negotiations, according to four people familiar with the ongoing discussions.
The border-adjusted tax, which would replace the current 35 percent corporate rate with a 20 percent levy on companies’ domestic sales and imported goods, had been a centerpiece of the House GOP tax plan endorsed by Brady and Ryan. It was estimated to generate more than $1 trillion over a decade, which would help pay for tax cuts promised by Republicans.
The concept had been under attack by retailers and other industries that rely on imported goods, who mounted a campaign saying it would raise prices for working Americans on everyday goods.
Ryan’s office didn’t immediately respond to a request for comment.
