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The proposal,
known as border adjustability, is part of a larger tax reform
plan backed by Republicans in the House of Representatives,
including Speaker Paul Ryan. It has attracted the attention of
advisers to President-elect Donald Trump as a potential tool for
creating manufacturing jobs for blue-collar Americans.
But the provision, which would tax imports while exempting U.S.
exports from corporate income tax, has raised concerns in the
retailing and energy sectors about its potential effects on
prices for imported consumer items and foreign goods used in
domestic production.
Corporate lobbyists say that Trump's threatened 35 percent
import tax against U.S. companies that move jobs overseas could
reflect an interest by the president-elect in a border-adjusted
approach to tax reform.
The Trump team and Republicans in Congress are currently trying
to hammer out an agreement on tax reform for 2017.
"The proposed border tax adjustment will distort the market,
increase consumer prices and create an uneven playing field for
companies and consumers," Philip Ellender, who oversees
government and public affairs for the Wichita, Kansas-based
multinational, said in a statement.
"The long-term consequences to the economy and the American
consumer could be devastating," added Ellender, who said Koch
otherwise supports tax reform.
Koch is the second largest private U.S. company, with operations
that range from refining and chemicals to ranching and forest
products. Its owners are known to spend heavily on conservative
initiatives and to oppose government intervention in business.
Representative Kevin Brady, Republican chairman of the House tax
committee that produced the reform plan, welcomed the Koch
statement as feedback but described border adjustability as "a
key provision" that would level the playing field for "Made in
America" products.
Brady has said the plan would unleash economic and job growth by
cutting the corporate tax rate from 35 percent to 20 percent,
simplifying the tax code and encouraging investment.
Border adjustability would help pay for tax cuts by generating
$1.2 trillion in revenues over a decade, according to the
non-partisan Tax Policy Center.
The provision would also discourage U.S. companies from moving
operations abroad as a result of another provision, which would
eliminate U.S. taxes on the foreign profits of U.S.
multinationals.
(Reporting by David Morgan; Editing by Andrew Hay)
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