Koch Industries fought back Wednesday against a lawmaker’s suggestion that the Koch network is defending a special interest tax break in its relentless fight against the House Republican plan to create a border-adjusted corporate tax.
The company, owned predominantly by the libertarian megadonors Charles and David Koch, argued that its efforts to defeat the border-adjustment provision are motivated by concern for consumers, not its own corporate interests.
The border-adjusted tax would tax sales based on whether they occurred in the U.S. To do so, the plan would exempt export sales from taxable income but prevent companies from deducting the cost of imported goods from taxable income. Critics fear that the plan would risk tax increases on imported materials. Oil imported by Koch refineries could effectively face an import tax in that scenario.
“We oppose the [border-adjusted tax] because it will raise the costs of goods that Americans rely on every day in order to pay for tax cuts for companies like Koch,” said Philip Ellender, president of government and public affairs for Koch Companies Public Sector, in a statement to the Washington Examiner. “It will stifle free and open trade, distort the markets and raise costs to consumers.”
Ellender was responding to comments made Tuesday by Texas Rep. Kevin Brady, the Republican chairman of the House Ways and Means Committee and the top proponent, with House Speaker Paul Ryan, R-Wisc., of adjusting taxes at the border.
Asked about the activism of Koch-affiliated groups against border adjustment, Brady told reporters that he was “excited to be on offense” against the current system of U.S. taxes, in which companies are taxed on profits, whether they are earned domestically or abroad.
“I see this just as special interest fighting to retain a special tax break that, frankly, we think it’s time to end,” Brady said.
Ellender responded that Koch Industries in the past has opposed tax breaks and regulations that benefit its business, such as tax credits for blenders of ethanol. “Respectfully, please show us that tax break and we’ll oppose it,” he said.
Koch-affiliated groups, including the political nonprofits Americans for Prosperity and Freedom Partners, have mounted an aggressive campaign to sway lawmakers against the idea of border adjustment. Combined with similar efforts by the retail industry, the onslaught has helped turn many Republicans against the proposal and dim the chances that the provision survives.
In recent election cycles, Koch groups have been among the biggest boosters of Republican candidates.
The groups recently launched an ad campaign calling on lawmakers to support tax reform, minus border adjustment.
But the border adjustment is a key part of House Republicans’ tax reform math, raising about $1 trillion over a decade, according to outside groups, to allow for rate reductions.
