Americans for Prosperity, a major political nonprofit backed by the libertarian Koch brothers, announced Thursday plans to rally its network of activists to oppose the House Republican plan to adjust taxes at the border.
The effort places the group in conflict with the party it typically supports, trying to get House GOP leaders to kill the provision before it advances any further — and warning them of bad outcomes if they do not.
“House leadership needs to consider continuing to put both vulnerable members and folks who are going to have to go back to their districts and defend this vote in a dangerous situation by taking something that does not have a future when it crosses over in the Senate,” said Brent Gardner, the chief government affairs officer for the group, speaking on a call with reporters Thursday.
The group said it would key-vote any border adjustment tax and said that it planned to engage 21 senators in 15 states and the same number of representatives, focusing on members of the tax-writing committees.
Next week, when Congress is out of session, Americans for Prosperity will be sending activists to lawmakers’ district offices, the group said, with 100 meetings already scheduled. The next week, they plan to send state directors to the Capitol to weigh in on the issue.
The network of Koch businesses and nonprofit groups was among the earliest and most vocal opponents of the House GOP plan.
House Republicans have proposed taxing imports as part of a broader corporate rate-cutting reform that would tax goods based on where they are sold. In the plan, companies would no longer be allowed to deduct the cost of imported goods and services, but would no longer pay any taxes on revenues from exports. In today’s system, U.S. companies are taxed on all profits, whether they are earned in the U.S. or abroad. Republicans say that the change would encourage more manufacturing within the U.S., and discourage companies from moving production overseas.
For refineries such as the ones owned by Koch Industries, however, higher taxes on imported crude oil could be a major blow.
On Thursday, Americans for Prosperity President Tim Phillips called it a $1.2 trillion “consumer tax” and said that stopping it was a priority.
A major reason for Republicans to consider border adjustment is that, by raising revenues, it allows them to lower corporate tax rates without adding to the federal debt.
Gardner, however, said that rather than ways to broaden the tax base, Republicans should cut spending to offset tax rate cuts.
Nor would excluding certain imports from the import tax make the concept of border-adjustment more acceptable, Gardner said. Instead, carve-outs for specific industries would make it less “palatable,” and there is no scenario in which the group would support border adjustment.
Two Republican senators, Tom Cotton of Arkansas and David Perdue, already have sketched out objections to the tax idea and are viewed by Americans for Prosperity as allies. Gardner added that the group has heard privately from House Republicans about concerns over the provision and hopes for more to speak out about it.
