(From The Libertarian Republic)
The subject of last week’s meeting was the Border Adjusted Tax, a part of Ryan’s tax plan which treats business income generated from exports more favorably than business income generated from the resale of imported goods. The tax package includes a reduction in corporate income taxes to 20% for domestic revenue minus domestic costs. The current federal corporate tax rate is 35%, the third highest in the world.
In the publication that bears his surname, Steve Forbes explained it rather simply:
“Here’s how, in essence, this sneaky, anti-consumer tax works. Importers will no longer be allowed to deduct an item as a business expense. To simplify things, let’s say a store imports a pair of sneakers for $40 and then sells them for $50, making a $10 profit on which it would owe taxes. Under the Republican plan, however, the retailer wouldn’t be able to deduct the $40 it paid for the sneakers. In fact, it would owe taxes on the entire $50! And who, ultimately, pays this tax? You, the consumer, in the form of higher prices or fewer choices of where you can shop. Retailers and their customers will be hit.”