Key Senate chairman doesn't rule out border-adjustment tax

Key Senate chairman doesn't rule out border-adjustment tax
© Victoria Sarno Jordan

Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchPhRMA CEO 'hopeful' Trump officials will back down on drug pricing move Live coverage: Trump AG pick grilled on Mueller probe at confirmation hearing Trump praises RNC chairwoman after she criticizes her uncle Mitt Romney MORE (R-Utah) said Wednesday that he’s not going to publicly rule out the border-adjustment tax supported by House GOP leaders, even as he acknowledged that the proposal faces opposition from many senators.

“As far as I’m concerned, virtually any potential [offset] for reduced tax rates should be on the table, and that includes the so-called border-adjustment tax,” Hatch said at a conference hosted by Bloomberg BNA and Baker McKenzie.

Under the border-adjustment tax proposal in the House GOP blueprint, imports would be subject to a 20 percent tax and exports would be exempt.

Speaker Paul RyanPaul Davis RyanAEI names Robert Doar as new president GOP can't excommunicate King and ignore Trump playing to white supremacy and racism House vote fails to quell storm surrounding Steve King MORE (R-Wis.) and House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyTexas governor, top lawmakers tell Trump not to use hurricane relief funds to build border wall Trump on declaring national emergency: 'Not going to do it so fast' Dems look to chip away at Trump tax reform law MORE (R-Texas) have championed the idea, arguing that it would raise revenue to pay for lowering tax rates and would encourage companies to move jobs back to the United States.

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But the proposal faces long odds because of opposition from retailers and GOP lawmakers, who fear it would lead to higher prices on consumer goods. The White House has also said it does not support the proposal in its current form. 

Hatch said that the proposal would have a “difficult time becoming law” because many senators are opposed to it. But he also said he wants “to see the specifics of the proposal and find out if it works like its proponents say it will.”

The border-adjustment tax is one of several issues where Republicans are divided on tax reform. Hatch said that congressional Republicans and the White House agree on about 80 percent of the main issues in tax reform and that resolving the remaining 20 percent will take discussions and compromise.

Hatch said his goal with tax reform “is to find the proverbial ‘sweet spot’ that will maximize the growth potential of the final package without jeopardizing its prospects for passage.”

In addition to the border-adjustment tax, Republicans are divided on tax rates. The House GOP tax plan proposes lowering the corporate tax rate to 20 percent, while the White House’s plan proposed a corporate rate of 15 percent.

Hatch said that he’s not wedded to any specific targets for tax rates.

“Until we perform the surgery and start eliminating preferences and credits in order to bring down rates — and get official feedback from the Joint Committee on Taxation — we can’t speak definitively on the rate targets,” he said. He added that he thinks everyone wants to get tax rates as low as possible.

He also said that he’s not wedded to a tax bill being revenue neutral but acknowledged that some Republicans would have a hard time supporting a bill that increases the deficit.

“Personally, I don’t see a problem with a tax reform proposal that loses revenue in the short term if we can show that it will help put our economy on a better growth path,” he said. “But, like I said, we’ll need to see where the votes are.”

Some Democrats have suggested that they won’t vote to increase the debt limit unless tax reform is revenue neutral and doesn’t cut taxes for the wealthy.

Hatch blasted this idea, saying it “would go far beyond anything demanded of President Obama” and is “a vague demand that would just beg my colleagues to constantly move the goalposts.”

The Finance Committee chairman criticized Democrats as opposing Trump at all costs instead of trying to find common ground. But he also said that he still wants tax reform to be bipartisan.

The top Democrat on the House Ways and Means Committee, Richard Neal (Mass.), also said at the conference it would be beneficial for Democrats and Republicans to work together on tax reform.

“If you’re going to have meaningful tax reform, it needs to be bipartisan,” he said.

Neal criticized Trump’s tax plan because he said it would add to the deficit and disproportionately benefit wealthy people. He also said he thinks the border-adjustment tax “would have trouble getting out of the Ways and Means Committee.”