Trump campaign adviser: Border tax unlikely to be enacted

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A Heritage Foundation economist who advised President Trump’s campaign said he doubts a proposal from House Republicans to tax imports and exempt exports will gain traction.

“I think it’s a distraction,” Stephen Moore said Tuesday at an event hosted by Bloomberg BNA.

Moore, who was involved in writing Trump’s campaign tax plan but does not have job in the administration, said he supports the the House Republicans’ “border-adjustment” proposal because he thinks it “takes tariffs off the table.” The proposal is part of the House GOP tax-reform blueprint.

But he noted that other Republican thought leaders don’t support the concept, and said it’s a “pretty prickly issue.” 

{mosads}The border-adjustment provision would raise at least an estimated $1 trillion over 10 years that could be used to pay for other tax cuts. A tax reform bill without the provision would have to have a higher corporate tax rate, Moore said.

The border-adjustment tax has been the subject of intense lobbying efforts in recent months. Some businesses argue that it would improve the business climate for domestic manufacturers, while retailers and oil refiners are concerned that it would lead to higher prices for consumers.

The White House has expressed openness to the provision but hasn’t taken a definitive stance. Gary Cohn, the head of Trump’s National Economic Council, told CNBC on Friday that the administration is “exploring every and all options to get our U.S. corporate tax rate down to the lowest possible level we can get it.” 

In a later part of the BNA event, House Ways and Means Committee Chairman Kevin Brady (R-Texas) made the case for the border-adjustment proposal. He said it would remove incentives for companies to move jobs overseas and would simplify the international tax system.

“This is transformative in combined with the rest of the tax code,” he said.

Moore also said he thinks it would be smart to separate business-tax reform from individual tax reform and pass legislation that includes business tax reform and infrastructure spending with Democratic support. And he said he’s advised the Trump team to announce now that any tax changes passed this year will be retroactive to the beginning of the year.

Brady said that he thinks the most pro-growth approach to tax reform is to do it on a comprehensive basis, and that lawmakers haven’t decided yet when provisions in a House Republican tax bill would take effect.

The Ways and Means Committee chairman said that his panel is working on finalizing elements of a bill in the weeks and months ahead, and thinks that the “optimum schedule” would be for tax reform to be completed by the summer.

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