Border adjustment tax will be part of tax reform, chief GOP tax writer says
The Republican's chief tax writer, Rep. Kevin Brady, told CNBC on Wednesday he is "confident" that the border adjustment tax will be included in the tax reform plan, despite some opposition to the controversial measure.
That's because it is a "critical" component of the plan, the chairman of the House Ways and Means Committee said in an interview with "Closing Bell."
"If you don't have that in there, tax rates on our local businesses, small and large, will go up. Our tax code will continue to favor foreign products over American-made products and we'll continue to have major incentives to drive jobs and headquarters overseas. That can't continue," said Brady, R-Texas.
The plan would allow companies to deduct the cost of goods that are exported. Importers, however, would not receive the same benefit — effectively imposing a tax on their products.
The "border adjustment" proposal is estimated to raise about $1 trillion in tax revenue that would help pay for lowering the corporate tax rate to 20 percent, though most estimates indicate that it would not cover all the revenue lost from a lower corporate rate.
On Wednesday, Brady met with retail industry leaders who oppose the tax, shortly after they met with President Donald Trump. Retailers believe it would raise consumer prices and hurt their businesses.
Brady called the meeting a good one.
"We agree we want to make sure we have the lowest prices possible through true competition," he said. "I invited them today, as I have for some time now, to come to the table, to help us make sure we have the design right and we have the transition right so that we can grow the U.S. economy in a very strong way."
He also predicts the overall tax reform package will happen in 2017.
"I'm optimistic at the end of the day we get this done this year and it's going to be, I think, the boldest tax reform we've seen in 30 years or more."