The outsider-businessman senator from Georgia told Breitbart News he opposes attempts in Congress to create a Border Adjustment Tax because it is an unfair shifting of the tax burden onto regular consumers and disrupts America’s nascent economic recovery.
“This is what Washington does,” said Sen. David Perdue (R.-Ga.), who is a member of the Senate Budget Committee and was for many years a senior business executive, including stints as the president and CEO of the Reebok sporting goods company and the Dollar General retail chain. “Because we do scoring in this town, some people have come up with the Border Adjustment Tax to pay for changes in the tax system–I am not one of them.”
“The administration is talking about tax reform to get the economy going again–I welcome that–individual tax restructuring, reducing the corporate rate, get rid of some of the corporate welfare deductions that are embedded in our system, and eliminate this repatriate tax,” he said. “These are all pro-growth tax changes that we need to do.”
America’s business tax rate is 35 percent, which is mitigated by deductions that reduce the amount of taxable profit. However, businesses bringing in profits from overseas are taxed at the flat 35 percent with no deductions. The tax on repatriated business profits led to at least $2 trillion parked outside the United States.
Perdue said whatever its merits, the Border Adjustment Tax changes the winners and losers from how things play out with the current system.
The House Ways and Means Committee is still working out the details, but in general terms, a Border Adjustment Tax would tax products and services at different transaction points as a Value Added Tax, or VAT, which is then fully or partially rebated if the product or service is exported out of the United States. This the border adjustment. Goods and services coming into the United States would be subject to a tariff or entry tax and then whatever transactions happen along the day.
Because many of our trading partners have their own version of the BAT, their exports to America have a special tax advantage and their systems encourage American companies to establish manufacturing in those countries for that tax advantage. While the Constitution forbids duties on our own exports since the end of the Second World War, duties on imports have steadily declined through legislation and treaties — so much so that they are not considered consequential. Except in rare cases, American import duties offer no protectionary effect for American companies.
Speaker Paul Ryan (R.-Wis.) is a strong proponent of the BAT because it monetizes the country’s trade deficit, which would pay for tax reform somewhere else and to level the playing field with countries taking advantage of our lower tariffs.
It is estimated that a BAT would raise $1 trillion in new revenues, that would then be the “pay-for” allowing tax cuts elsewhere. This need for a “pay-for” or revenue-neutral tax reform is the “scoring” Perdue said clouds Washington thinking.
Perdus said, “A Border Adjustment Tax is a tax on low income and middle-income consumers — it hammers them.”
The senator said in addition to shifting more of the tax burden to regular Americans, the lesson from Europe, where the BAT is common, is that the tax punishes specific industries and strengthens central governments.
Further, he said he does not see an American BAT becoming revenue neutral.
“Under the last two presidents, since 2000, our government growth from $2.4 trillion to $3.9 trillion–those are constant dollars–we don’t need tax to incent this government to grow,” he said. “If anything, we need to downsize this government to get our debt crisis in order”
The Georgian said he was confused as to why Congress would even consider a comprehensive reshifting of tax burden just as the economy was starting to perk up.
“Why would we want to take the risk right now?” he asked.
“We have an embryonic turnaround building, consumers are beginning to be a little more confident that we are going to pull back on some of these regulations–Obamacare and Waters of the U.S. and some of these things that are hindering the growth of businesses,” he said.
With $6 trillion sitting on the sidelines, businessmen are starting to believe the economic environment is getting better, so that they are investing and hiring again, he said.
“Why would we take that chance now to test a theory?” he asked.
“Right now, we have to trust the free enterprise system, adjust the corporate and repatriation taxes ,and let this economy grow.”
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