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The BAT is promoted as a \u201ctax on imports.\u201d\u00a0Which, I guess, is technically accurate, but doesn\u2019t tell the whole story. It\u2019s not just a tax on imports. It\u2019s a tax on people who buy the imports. That is, it\u2019s a tax on you.<\/p>\n
For obvious reasons, retail\u00a0merchants don\u2019t like the idea very much. It would force them to raise prices on lots of items. Which is the same reason you shouldn\u2019t like it, unless you like paying more for stuff than you pay now.<\/p>\n
For equally obvious reasons, some American manufacturers love the Border Adjustment Tax. Every extra dollar you have to pay in tax for something made abroad\u00a0is a dollar they don\u2019t have to find ways to cut from their manufacturing costs to compete on price. For them it\u2019s the equivalent of running a race in which their competitors have to carry backpacks full of lead and they don\u2019t.<\/p>\n
The politicians behind the idea love it because it would let them give their business\u00a0cronies a huge\u00a0tax cut \u2014 reducing the corporate tax rate from 35% to 20% \u2014 without reducing government spending.<\/p>\n
Ultimately American consumers\u00a0pay both types of\u00a0taxes, of course, but the BAT would shift the burden to customers who buy goods\u00a0made in\u00a0China, Mexico, South Korea, Pakistan and so on, hurting retailers who sell those things in order to\u00a0subsidize American manufacturers at everyone else\u2019s expense.<\/p>\n
All this talk of \u201ctax reform\u201d is just smoke and mirrors, a way of disguising the reality that every dollar government spends has to come from somewhere, and that somewhere is taxation. Borrowing money is just promising to tax later. Inflating the currency is just a hidden tax.<\/p>\n
Shifting the tax burden around with tricks like a \u201cBorder Adjustment Tax\u201d isn\u2019t real reform, it\u2019s just rearranging the deck chairs on the Titanic. The first step in any meaningful reform is for Congress to commit to spending no more money than it takes in. The second is for it to start taking in less.<\/p>\n
Republished from The Libertarian Institute<\/a>.<\/em><\/p>\n Thomas L. Knapp, aka KN@PPSTER<\/a>, is Director and Senior News Analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism<\/a>\u00a0and publisher of Rational Review News Digest<\/a>. He lives and works in north central Florida.<\/p>\n
\nThomas Knapp
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