While several Republican leaders had spent more than a year championing the border-adjusted tax, and Boeing had lobbied strongly for such a tax, retailers’ groups had strenuously opposed the measure.
Republican leaders said Thursday that the proposed border-adjusted tax won’t be part of negotiations on how to overhaul the U.S. tax code — delivering a victory to retailers’ groups that had strenuously opposed the measure.
A statement Thursday from the so-called Big Six — which includes House Speaker Paul Ryan, Ways and Means Chairman Kevin Brady, White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch — said due to the unknowns associated with the border-adjusted tax, the group “had decided to set this policy aside in order to advance tax reform.”
“And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base,” the statement said.
Ryan and Brady had spent more than a year championing the border-adjusted tax.
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Boeing CEO Dennis Muilenburg and the 330-company Aerospace Industries Association that he leads had lobbied strongly for such a tax earlier this year.
While the decision announced Thursday will clarify some issues related to Republican leaders’ attempts to enact the first comprehensive tax overhaul in more than 30 years, it leaves a key challenge: How to balance desired tax-rate cuts with new sources of revenue. The border-adjusted tax would have raised more than $1 trillion over a decade, according to estimates. The joint statement contained little clues about that path forward.
Brady told reporters Thursday it was a “significant” day for tax reform, but added that tax writers “still have lots of work to do.” Asked about any other concrete decisions the group had made in recent months, Brady demurred, citing unspecified “progress” toward a unified tax solution.
The statement Thursday set a goal for formulating a plan that “places a priority on permanence” — a signal that the group still wants a tax bill that balances new revenue against its tax-rate cuts.
But without the revenue from border-adjusted…