Rep. Devin Nunes (R-Calif.) on Thursday defended a provision in the House Republican tax plan that would tax imports and exempt exports, saying it's "a little offensive" that some U.S. companies are criticizing it.
Retail groups and Koch Industries have come out against the "border adjustment" plan, saying it would raise prices for consumers.
But in an interview with CNBC, Nunes said that implementing the proposal would make the U.S. tax system more similar to that of other countries, which already have border-adjustment taxes.
"This is not controversial, and quite frankly, it's a little offensive that some of the major American companies that are importers who do business worldwide are even raising concerns of this plan, because I don't see them going to Germany or Mexico or China to raise these concerns," said Nunes, a longtime member of the House Ways and Means Committee.
The tax-writing panel is currently working to create legislation based on its plan, and congressional Republicans are aiming to pass something this year.
Nunes said the border-adjustment proposal would not be an added tax for companies because their business models and investment strategies would change.
"This encourages investment in the economy," he said.
CNBC senior contributor Larry Kudlow — who advised President-elect Donald TrumpDonald TrumpSanders calls out Manchin, Sinema ahead of filibuster showdown Laura Ingraham 'not saying' if she'd support Trump in 2024 The Hill's 12:30 Report: Djokovic may not compete in French Open over vaccine requirement MORE's campaign and is reportedly being considered to lead his Council of Economic Advisers — pushed back on the border-adjustment plan during the segment.
"I don't agree that we have to have border adjustability and we have to subsidize exports," Kudlow said. He also disputed a comment Nunes made about the plan getting rid of the corporate income tax.
Nunes replied that when he talks about getting rid of the corporate income tax, he is referring to the House GOP plan's move to a cash-flow tax system.
"Yes, companies will still pay tax on the income that they earn, but they will be encouraged to invest," Nunes said. The congressman added that it's important to educate the public about the plan.
Kudlow replied that "this is the kind of thing that could doom business tax reform" and said that Americans don't want a consumption tax.
He added that a border adjustment is "an exercise in government planning and complexity that I believe is doomed to fail."
"If you stay with this, congressman, I think the whole corporate tax reform, which is the most important pro-growth measure, will go down the drain over this," he said.