House Republicans Still Pushing Border Adjustability Despite Its Omission From Trump Tax Plan
The Trump administration is willing to work with House Republicans on the 20 percent of their respective tax plans that don’t align, including border adjustability, House Ways and Means Chairman Kevin Brady, R-Texas, told reporters April 30. Treasury Secretary Steven Mnuchin “has indicated he’s willing to work with us on border adjustability, to refine that, because … [President Donald Trump] is dead serious about leveling the playing field for American companies and workers,” Brady said. “We’re not going to have a tax code that favors foreign products and foreign workers over American products and American workers.” Ways and Means Republicans met during a retreat to discuss tax reform April 30 and May 1. The White House tax reform plan released April 26 omitted border adjustability elements (see 1704260036). Brady said that his committee will likely hold hearings on tax reform this month.
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Meanwhile, an April 25 Congressional Research Service report (here) cited concerns that the World Trade Organization might find border adjustability illegal, and that the plan could violate bilateral tax treaties. It also notes that most lawyers looking at tax reform “appear to believe that the border adjustments will not be legal, especially the tax imposed on imports,” because the plan would disallow deductions for imports. The CRS said any violation of WTO rules would necessitate major changes to U.S. tax law, such as abandoning the “destination basis” of the House GOP tax plan or converting the tax to a “true value-added tax.”