Republican Tom Cotton of Arkansas went to the Senate floor today to say he has "grave concerns" about the GOP’s plan to border-adjust corporate taxes. He played it as a tax increase on shoppers at Walmart, which has expressed opposition to the proposal and that happens to be headquartered in Arkansas.
In his prepared remarks, Cotton said that he will not judge the proposal until he actually sees the bill. So far, that means that at least two Senate Republicans are opposed to the border adjustment. The other is Sen. David Perdue (R-GA), who has tried to bring together other critics of the proposals. He is a former CEO of the Dollar General retail chain. The Koch brothers are reportedly opposed to it as well.
Senate Finance Committee Chairman Orrin Hatch (R-UT) is tagged with bringing about tax reform in the upper chamber and can lose but only two votes of the GOP caucus at most if the legislation is passed along party lines.
The Republican proposal would tax imported goods as part of cutting corporate tax rates, based on where the goods are sold. If passed, businesses would no longer be allowed to deduct the cost of imported goods and services, but would no longer pay any taxes on revenues from exports. Currently, American businesses are taxed on all profits, whether they are earned domestically or in foreign countries. House Republicans claim that the measure would mean job growth through increased manufacturing in the US while discouraging companies from taking production off-shore.
Other Republicans opposed to border-adjustment are:
Senator Johnny Isakson of Georgia, where the Home Depot has its headquarters;
North Carolina Senators Richard Burr and Thom Tillis. North Carolina is home to Lowe's hardware and home improvement stores;
Senator Mike Lee of Utah;
Senator John Cornyn of Texas is concerned about border adjustment's effect on gasoline prices.
While White House aide Steve Bannon is known to favor the proposal, it remains to be seen whether President Trump will support it. House Republicans are backing in nationalist terms, which rings consonant with Trump's campaign themes.
Cotton said “border-adjustment” had a ring of George Orwell’s “1984” novel. He said that the measure would hike taxes for "working Americans who've been struggling for decades while the rich keep getting richer."
"Why would we make their stuff at Walmart more expensive?" he asked. Advocates of the bill said that the US dollar would increase in value and leave importers in good stead. Cotton was not buying it. He said, "This is a theory wrapped in speculation inside a guess."
Retail industry executives met with President Trump today to express opposition to the measure. They believe the economy would be hurt if their costs increase under an overhaul of the tax code. Company execs came from a number of companies, including AutoZone, Tractor Supply, Jo-Ann Fabric and Craft Stores, Target, Best Buy, Gap and JCPenney.
The National Retail Federation asserts that the measure, crafted by House Speaker Paul Ryan (R-WI), is risky and unproven. They believe that importers would receive no benefit from the proposal.
There is an estimate that the would raise about $1 trillion in tax revenue and work towards lowering the corporate tax rate to 20 percent, though most estimates indicate that it would not cover all the revenue lost. Retailers have formed a group called Americans for Affordable Products. Some of them met with Rep. Kevin Brady (R-TX), who chairs the Ways and Means committee that will turn the plan into a bill.