Trump Refuses Republican Border Adjustment Tax Reform

US President-elect Donald Trump has criticized the border adjustment provision, a feature of the House Republicans' corporate-tax plan, during an interview on January 16.

Border Adjustment

The border adjustment measure is part of US House of Representatives Speaker Paul Ryan's "Better Way" tax reform blueprint. The measure tries to change the current tax code that allows companies to build goods in low-tax countries and then import those goods to the US. It intends to boost US manufacturing by taxing such imports and allowing US business exports to be exempt from corporate taxation.

"Too complicated"

Trump said that the border adjustment provision is too complicated. “Anytime I hear border adjustment, I don’t love it. Because usually it means we’re going to get adjusted into a bad deal. That’s what happens,” he said.

“Devastating” long-term consequences

The industrial conglomerate Koch Industries alarmed over the provision in December last year saying that it would have “devastating” long-term consequences for the economy. Koch Industries believes that rebate distorts the free market and could raise consumer prices. Accordingly, some of the oil companies and retailers said that the measure would raise their tax bills and prompt an increase in prices given their dependence on imported goods.

Sources: WSJ, Forbes, Morning Consult, Economist

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