NRF condemns House Ways and Means proposal to phase in Border Adjustment Tax over five years

Brady Suggestion Remains a ‘Massive Middle Class Tax Hike’

WASHINGTON, 2017-Jun-14 — /EPR Retail News/ — The National Retail Federation today (June 13, 2017) condemned a proposal by House Ways and Means Chairman Kevin Brady to phase in a Border Adjustment Tax over five years.

“Phasing in a job-killing plan like the Border Adjustment Tax does nothing to fix its many flaws,” NRF Senior Vice President for Government Relations David French said. “It is a massive middle class tax hike based on unproven economic theory, and doing it more slowly won’t make it any less harmful to millions of American workers. If Chairman Brady is truly listening to his colleagues in the House and the Senate, he will drop the proposal altogether and move on with a new tax reform plan that can win majority support in Congress and gain the President’s signature.”

The United States has one of the highest corporate tax rates in the world and NRF has led the retail industry in advocating for comprehensive tax reform that would broaden the tax base and lower the rate. Retail benefits from few of the tax breaks that lower tax bills for other industries, and most retail companies pay at or close to the full 35 percent rate.

The “Better Way” tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and Ways and Means Committee Chairman Kevin Brady, R-Texas, includes a provision that would, in effect, create a 20 percent border tax on imported goods by ending retailers’ ability to deduct the cost of merchandise that they import. That means retailers would be taxed at nearly the full selling price of imported merchandise rather than just their profit.

The border adjustment tax would have significant implications for retailers and other industries that rely on complicated global supply chains, including automobiles, technology, food and fuel. Analysis by NRF and many of its member companies indicates that the proposed tax would drive up costs, erode profits and exceed any benefits from a lower corporate tax rate. It would require consumer price increases of 15 percent or more to retain profitability, effectively creating a new tax paid by consumers.

The BAT would also put at risk millions more retail-supported jobs than it would theoretically create for manufacturing. A BAT could cause retailers to see tax bills three to five times the amount of their profits, threatening to drive some merchants out of business. The small retailers that make up 98 percent of the retail industry and provide 40 percent of its jobs would be at the biggest risk.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s econom

Contact:
Robin Roberts
press@nrf.com
(855) NRF-Press

Source; NRF

RILA’s Jennifer Safavian: The border adjustment tax would jeopardize 42 million jobs retailers currently support

A Border Adjustable Tax Will Be ‘Uniformly Devastating’ To Retailers And Consumers

Arlington , VA, 2017-May-24 — /EPR Retail News/ — ​Today (5/23/2017), Retail Industry Leaders Association Executive Vice President for Government Affairs Jennifer Safavian issued the following statement as the House Ways and Means Committee began its hearing examining the economic and consumer impact of a border adjustable tax:

“As the nation’s largest private-sector employer, retailers support pro-growth tax reform that lowers corporate rates, scrutinizes all deductions and credits in the code, and creates a level playing field among industries.

“Retailers will continue to aggressively oppose any plan that attempts to shift the nation’s tax burden from certain corporations that currently are subject to low effective tax rates onto America’s working families. The border adjustment tax would jeopardize 42 million jobs retailers currently support, and would put an undue burden onto millions of American families that are struggling.

Retailers are confident that tax reform can be a win-win for job creators and American families. We urge lawmakers to scrap the controversial and divisive border adjustment tax and focus on crafting a tax reform plan that benefits all Americans.”

RILA provided a statement for the record during today’s hearing in support of pro-growth tax reform without a harmful border adjustment tax. In her statement, Safavian reiterated the fact that a BAT picks winners and losers and gives an unfair, anti-competitive advantage to companies already paying much lower effective tax rates.

“American companies are at a huge competitive disadvantage with our international competitors,” Safavian told the Committee. “This is not because of a mythical “Made in America” tax. Instead it is a result of the U.S. statutory corporate tax rate being extremely high by international standards…The border adjustable tax would not improve U.S. competitiveness. Instead, the border adjustable tax would impose price increases on American families, while also causing a devastating financial impact on the retail sector – so much so that the financial viability of many companies would be put into question.”

Safavian also focused on the impact to American consumers.

“The border adjustable tax, which would in effect place a new 20 percent tax on imports while completely eliminating the tax on exports, will force retailers to significantly raise prices on everyday consumer staples such as food, medicine, clothing, electronics, and home improvement items. Many personal necessities like life-saving drugs and items essential to the operation of U.S. small businesses, such as cell phones, have no domestically manufactured equivalent and will not in the foreseeable future. While margins on retail goods are already low, adding the border adjustable tax on top of the cost of those goods means that retailers have no other choice than to pass this additional tax onto American families.”

Safavian shared findings from a survey of American retailers conducted earlier this year on the impact of the border adjustable tax and the provisions of the House Republican Tax Reform Blueprint in their entirety (i.e. 20 percent rate, full expensing, territorial tax system). The results were uniformly devastating for the retail industry.

Examples of the representative responses include:

  • One retailer stated that their historic effective tax rate is 39 percent. Based on a three-year analysis, their effective tax rate would be between 140-288 percent.
  • Another retailer found that their effective tax rate would go from 37 percent to 102 percent as a result of the border adjustable tax.
  • Still another retailer’s analysis showed their effective tax rate would go from 38 percent to between 84-94 percent.
  • Beyond the increase in effective tax rates, one retailer explained that overall, they would go from a $1.5 billion net income to a $3.5 billion loss.

Safavian concluded her statement by reiterating the fact that should Congress impose a BAT, American consumers and retail jobs will be at risk.

“The border adjustable tax would disproportionately impact the retail sector because we import many products that are not able to be sourced domestically. Such a drastic new tax would undermine the benefits of a corporate tax rate reduction, precluding the industry from realizing potential economic growth. A border adjustable tax will lead to higher prices for American families and put many retail businesses at risk.”

RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Contact:

Christin Fernandez
Vice President, Communications
Phone: 703-600-2039
Email: christin.fernandez@rila.org

Source: RILA

NRF launches new media campaign to educate Americans on the high consumer cost of border adjustment tax

WASHINGTON, 2017-Mar-01 — /EPR Retail News/ — The National Retail Federation today (February 28, 2017) launched a television, print and digital ad campaign to educate Americans on the high consumer cost of the border adjustment tax. The BAT is included in the House Republican leadership’s “Better Way” plan for tax reform. While NRF strongly supports tax reform, the BAT is bad tax policy that would increase costs on everyday necessities like food, gas, clothing and prescription medicines for the average family by as much as $1,700 in the first year alone.

“American consumers are being asked to foot the bill for a new $1 trillion tax giveaway for multinational companies, and this campaign will make sure those paying for it know it,” NRF Senior Vice President for Government Relations David French said. “We need tax reform that rewards entrepreneurs and allows businesses to grow and create good-paying jobs that lift working families up. The BAT does just the opposite, penalizing Americans by adding a tax on clothing, food, gas and other necessities while threatening the very industry that 42 million hardworking men and women rely upon for their livelihoods.”

The TV spot can be viewed on the campaign landing page, bat.tax, and will air starting today on the Fox News Channel’s morning program, “FOX and Friends,” and during the NBC show “Saturday Night Live” this Saturday, March 4. The television ads will be supported with a digital and print campaign and will encourage consumers to contact their members of Congress to express opposition to the border adjustment tax.

The BAT threatens America’s largest private-sector employer, putting at risk millions more jobs than it would allegedly create for manufacturing. Retailers support one out of four U.S. jobs, or 42 million positions — but a BAT could cause retailers to see tax bills three to five times the amount of their profits, threatening to drive some merchants out of business. The small retailers that make up 98 percent of the retail industry and provide 40 percent of its jobs would be at the biggest risk.

National Retail Federation
TV :60
“AS SEEN ON TV”

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NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

Contact:

Robin Roberts
press@nrf.com
(855) NRF-Press

Source: NRF