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NRF Batting Away At Border Tax Proposal

The National Retail Federation (NRF) this week condemned a proposal by House Ways and Means Chairman Kevin Brady (R-TX) to phase in a Border Adjustment Tax (BAT) over five years.

 “Phasing in a job-killing plan like the Border Adjustment Tax does nothing to fix its many flaws,” said David French, government relations senior VP for the retail trade group. “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.”

The BAT provision, part of the “Better Way” tax reform plan led by House Speaker Paul Ryan and endorsed by President Trump, would in effect create a 20 percent border tax on imported goods by ending retailers’ ability to deduct the cost of merchandise they import.

As a result, NRF warned, retailers would be taxed at nearly the full selling price of imported merchandise instead of just their profit.

Analyses by the trade group and member chains suggest that BAT would drive up costs, erode profits, raise retailers’ taxes to as much as five times their earnings, and force merchants to pass along price hikes of 15 percent or more to shoppers in order to remain profitable, NRF said.

See:Trump’s Border Tax Looks Like A Margin Killer

NRF and member CEOs, including Target’s Brian Cornell and Chris Baldwin of BJ’s Wholesale Club, took the fight to Capitol Hill last month where they met with legislators and Cabinet members including Commerce Secretary Wilbur Ross.

The trade group also took to the airwaves again with its second anti-BAT commercial (below), in which Treasury Secretary Stephen Mnuchin acknowledges that the measure “has the potential to pass on significant costs to the consumer.”