The controversial Republican border adjustment tax plan will finally get a hearing on Capitol Hill.
The House of Representatives will hold a hearing next Tuesday to examine the concept of adjusting corporate taxes at the border, the Ways and Means Committee announced Tuesday, in an effort to press ahead with the controversial idea despite increasingly negative signals from senators and administration officials.
The House GOP proposal, first unveiled last summer, would tax sales based on whether they take place in the United States. Under the proposal, business could deduct overseas sales from their taxable income, but would not be allowed to deduct the cost of imported goods. The plan generated intense lobbying opposition from retailers, oil refiners, and other industries that rely on imports.
Kevin Brady, the chairman of the Ways and Means Committee, told reporters Tuesday that he planned to continue advocating for border adjustment in negotiations with the White House and Senate, and said the current system was indefensible. "I'll continue to bring to the table our solutions how to address that challenge in the current tax code we have," he said.
He added that he has been listening to feedback from businesses and constituents and will offer a "new approach and designs on border-adjustment."
Senate Majority Leader Mitch McConnell, R-Ky., said in a television interview Tuesday morning that border adjustment probably would not pass the Senate, and called it a "pretty controversial thing."
When the White House introduced a tax reform outline last month, border adjustment was not included, and administration officials said that the concept needed work. Nevertheless, the administration has not ruled out including it in a future version of tax reform.
House Republicans favor border adjustment in order to eliminate incentives that corporations might face to move their headquarters or operations out of the country in order to take advantage of tax havens.
But it also would raise revenues, about $1 trillion over 10 years, according to one outside estimate, allowing Republicans to cut business rates lower without adding to the debt, at least on paper.