Finally today we see a significant loss for the “Big Club”. Speaker Paul Ryan, the GOPe professional business class, Wall Street and the U.S. CoC accept the Border Adjustment Tax is not going to be a part of any larger tax reform agenda under the Trump administration.
Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and President Trump win the policy argument with the removal of the B.A.T.
In a joint statement outlining the forward plans for tax reform the “Big Six” tax negotiators (Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch, House Ways and Means Committee Chairman Kevin Brady), announce the consumer punishing BAT will not be included.
[…] “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.” (more)
The B.A.T was to revenue collection on imported products and impact on consumers – what the Obamacare mandate was to revenue collection on healthcare and impact on consumers.
The B.A.T was simply a scheme to embed the cost of renegotiated trade import tariffs, directly onto the consumer, isolated away from any responsibility on the corporation to reduce their own internal efficiencies as a method to keep the price down. It was a dubious and manipulative effort.
Yes, direct tariffs targeted on specific imported goods ‘might‘ and ‘can’ drive the consumer price of the imported good higher. The price equity is what creates the space for U.S. manufacturers to compete on a level field.
However, importantly, in the free market where price is a key factor in the sale, the originating overseas business will also be under pressure to curb costs through efficiency and other offsets if a higher retail price lowers the consumer demand. This is the natural flow of trade economics.
The Paul Ryan corporate B.A.T. was a technique to avoid any corporation manufacturing imported goods having to take any operational action to offset the tariff. The BAT embeds a tax on the product as a variable offset to all exports by the same corporations.
♦Example under normal trade Tariff: Widget-Son corporation will pay a 10% U.S. trade tariff when they import flat-screen TV’s to the U.S. market.
♦Example under the BAT proposal. If Widget-Son Corporation exported the raw material [petroleum (plastic), Minerals (silver), etc] from the U.S., and assembled the finished product overseas, the finished product could return w/out a tariff if the net value of both raw materials and end products was the same.
•Notice #1 – under the B.A.T the value of off-shored manufacturing to the benefit of lower labor costs remains. The B.A.T was a scheme to work around actual manufacturing incentives in the U.S. (Globalism Wins)
•Notice #2 – under the B.A.T if a parent Corporation (umbrella co. ) crossed industry lines, meaning Father-Widget-Son also owns an agricultural export corporation, the parent company for Widget-Son could use exported value from BIG-Agriculture to offset their Widget-Son TV taxes. (Globalism Wins)
The entire B.A.T construct favored massive multinational corporations who could use export and import offsets to get around taxes, while small U.S. companies would be forced to deal with them.
If you understand the larger scheme within multinational corporations and trade – Explained Here – you can see how the BAT was actually structured to benefit advancement of multinational corporations and multinational banks at the expense of the U.S.
Essentially, the B.A.T retained the exact same scheme that has been ongoing for 30+ years. Global financial exploitation of national markets:
♦Multinational corporations purchase controlling interests in various national elements of developed industrial western nations.
♦The Multinational Corporations making the purchases are underwritten by massive global financial institutions, multinational banks.
♦The Multinational Banks and the Multinational Corporations then utilize lobbying interests to manipulate the internal political policy of the targeted nation state(s).
♦With control over the targeted national industry or interest, the multinationals then leverage export of the national asset (exfiltration) through trade agreements structured to the benefit of lesser developed nation states – where they have previously established a proactive financial footprint. (learn here)
Paul Ryan, Mitch McConnell and Orrin Hatch together with their “Big Club” crony capitalistic buddies within the U.S. CoC (Tom Donohue) always have a scheme to work the angles for the multinationals that fund them. However, this time their machinations were blocked by President Trump, Treasury Secretary Mnuchin and U.S. Commerce Secretary Wilbur Ross (and perhaps Cohn too).
WASHINGTON (Reuters) – A Republican proposal in the House of Representatives to institute a border tax on imported items has been killed, party leaders said on Thursday, saying they did so as part of a tax overhaul deal struck between congressional and administration negotiators.
The border adjustment tax was meant to discourage U.S. companies from manufacturing products overseas and then importing them back into the United States for sale. (read more)