PHILADELPHIA — The top House tax writer praised an announcement by the Trump administration that the United States would consider paying for a border wall with a tax reform plan that would impose a 20 percent tax on all imports.
The proposal matches one by the House Republicans, who have long advocated for a border-adjustment tax.
“This is very encouraging news that the White House is looking at bold reforms, just as Republicans are,” House Ways and Means Committee Chairman Kevin Brady, R-Texas, told reporters after meeting with rank-and-file lawmakers at a GOP retreat in Philadelphia.
Brady said the current tax code favors foreign products over U.S. products. A 20 percent tax on imports from all countries would end that advantage and would discourage U.S. companies from moving abroad, he said.
“It not only creates jobs here, it ends every tax incentive to move jobs overseas,” Brady said. “It establishes us as that magnet for growth in the 21st century.”
Both President Trump and his press secretary, Sean Spicer, indicated support for the idea during and after a meeting with GOP lawmakers in Philadelphia. Trump said generally the plan could help pay for the wall, while Spicer used the specific number from the House GOP plan, 20 percent, as an example of what could be done under the tax reform plan.
Many in Congress and the media interpreted those comments as a threat of new import tariffs on Mexican goods. But Spicer’s comments, which mentioned a comprehensive tax reform” underway, seemed to clearly refer to the House Republican tax plan, which would border-adjust corporate taxes by taxing companies’ purchases of imported goods while allowing them to deduct exports.
Grover Norquist, the influential anti-tax crusader and head of Americans for Tax Reform, also saw the Trump team’s comments as helpful to the tax reform effort. “Spicer just announced that border adjustability – once thought to be a sticking point for coming to agreement on fundamental tax reform – is now a consensus item,” he told the Washington Examiner in a statement, adding that Spicer’s comments mean “we are very close to enacting fundamental tax reform.”
Later in the afternoon, Spicer walked back his comments, saying they were only one of a menu of possible options.
But House Republicans leaders rushed Thursday to interpret the comments from the White House as support for their reform, which Trump has appeared to waffle on in recent weeks.
“What I heard today from this president was that in tax reform that they would level the playing field for imports from around the world, and level it with U.S. products here at the exact same rate,” Brady said later on Fox News.
“I don’t think they were singling out one country or another, and our tax proposal clearly doesn’t do that,” Brady said, rejecting the idea that the White House had threatened Mexico with a tariff.
On Twitter, Brendan Buck, a communications adviser to Paul Ryan, sought to cast the White House comments as support for the GOP plan, and said the GOP plan is not a tariff. “Our tax plan would tax imports instead of exports (today is the opposite). And this plan would include/allow a new lower rate of 20%,” he wrote.
One tension underlying the confusion over the White House’s statements Thursday is that Trump, in the past, has expressed a willingness to entertain the possibility of punitive tariffs on countries or on the products of U.S. companies that offshored jobs. Republicans have sought to portray their tax plan as addressing some of the same underlying concerns, without resorting to tariffs. In recent days, they’ve branded the destination-based tax as ending the “Made in America tax.”
The Trump team appeared to buy into that branding on Thursday, only to create the impression that they had threatened a tariff on the country’s number-three trading partner.
In the logic underlying the GOP reform plan, Mexico would not suffer from the border-adjustment. Brady and others have said that the dollar would adjust to the border-adjustment by appreciating, meaning that Mexican producers selling into the U.S. would be paid with more valuable dollars, offsetting the tax hit from the 20 percent tax.
