Much of the news recently has been about the inauguration of President Trump and his plans for sweeping legislative changes over his first 100 days in office. As part of his “America First” campaign, much of the focus has been about bringing jobs and manufacturing back to the United States and imposing penalties for producing goods outside of the U.S. If companies do not bring jobs and manufacturing facilities back to the U.S., President Trump has proposed a tariff on imports in an effort to make it too expensive to produce goods outside of the U.S. While House Republicans may agree with the intent of the proposal, they would like to go about it in a different manner.
Reuters Breakingviews recently provided an overview of the border tariff proposed by President Trump and the Border Adjustment Tax proposed by the House Republicans. President Trump’s approach is much simpler, with a levy as high as 35 percent that would apply to most firms that import goods to the U.S. For the House Republicans, led by Speaker Paul Ryan, they would like to incorporate border adjustments as part of a broader tax overhaul. The highlights of their proposal would include moving to a territorial tax system, whereby companies would be taxed where income is earned. Additionally, the cost of imported parts or finished goods for use or sale in the United States would no longer be deductible for tax purposes, while revenue from exports would be excluded from taxable income.
While it remains unclear which proposal will ultimately be agreed-to, it’s clear that both sides would like to see an overhaul of the U.S. tax code. You can read a copy of the full article on Reuters’ website here.
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