House Speaker Paul Ryan has been attempting to sell an element of his tax reform plan to congressional Republicans, but he isn’t having much luck. In fact, the GOP is struggling to find tax reform measures they can agree on at all.
Paul’s measure that is stirring up controversy among the GOP is a border adjustment tax that would be set up to generate over a trillion dollars over the next decade. The problem is that many Republicans are skeptical of the idea, and there isn’t an easy plan to replace that revenue with another tax measure.
In an attempt to sell the idea to Senate Republicans, Paul attempted to frame the border tax as a compromise between Trump’s call for a tariff and conservatives’ distaste for border taxes. He says the tax would follow the President’s mantra of “America first” by incentivizing American manufacturers that develop products in the U.S. and sell abroad.
But many Republicans aren’t buying it. A day after Paul pushed the measure at a Senate Republicans lunch on Tuesday, Sen. Tom Cotton came to the Senate floor to lament the proposal:
“Many other senators share these concerns and we most certainly will not ‘keep our powder dry…some ideas are so stupid only an intellectual could believe them.”
While he didn’t address the House Speaker by name, we might guess who he was referring to. According to many Republicans, the tax proposal would threaten big retailers in their states – for Cotton, that retailer is Walmart. According to Senate Finance Chairman Orrin Hatch, the border adjustment tax is unlikely to have the necessary support to make it out of the Senate.
There is even divide in the White House, where Trump’s chief strategist Steve Bannon supports the measure, but his chief economic adviser Gary Cohn is mostly against it. According to one source with close ties to the White House, however, says Trump will be unlikely to push the proposal if Republicans are divided.
Paul Ryan has his work laid out for him; House Republicans say that the tax plan in its entirety will be much harder to sell to the party if the border adjustment proposal isn’t included. For the Republican party, any tax reform may hurt one or another industry, and so it’s bound to cause controversy. Supporters of the plan say the border adjustment tax is the best option out there, and any other plan that would generate as much revenue would certainly die with the GOP majority.
But Ryan hasn’t quit trying to sell his plan. He says critics of the plan simply don’t understand what its final effects will be. He addressed a news conference on Thursday where he explained that American products are taxed higher than Japanese products. His border adjustment tax would simply make American-based businesses more competitive.
The GOP has been working on a tax reform plan for years, and those who are familiar with the process say it hasn’t gotten done yet because every tax proposal has enemies in the GOP:
“Ryan is impressing on his fellow Republicans that any tax reform proposal is bound to contain controversial measures — which is precisely why it hasn’t gotten done.”
All in all, prospects are looking grim for the GOP tax reform plan that has been in the works for many years now. That may spell out disaster for GOP attempts to create a conservative tax code that can fund needed programs, namely a new health care plan to replace Obamacare. With many saying the votes simply aren’t there, it looks like the GOP may be back at the drawing board.
