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International Tax

The feasibility of the border-adjustable tax

February 28, 2017
A photograph of a truck by Seb Creativo in Paso Garibaldi, Ushuaia, Argentina - via Unsplash.

More on that border tax…

Leonard E. Burman of the Tax Policy Center has an interesting look the feasibility of the border-adjustable tax (BAT) recently proposed by GOP lawmakers (aka the Mexico border tax.)

Although hardships caused by the BAT could be offset by a rising dollar, it seems that currency markets would not completely adjust where we need them to.

Currency markets aside, Burman comes to the conclusion that the BAT is unlikely to be enacted for three reasons:

  1. Importers hate it,
  2. The BAT would involve big tax refunds to exporters that can be characterized as “corporate welfare,”
  3. And oh, by the way, it’s probably illegal under WTO rules.

Small problems, I suppose.

More: TaxVox, “What Markets Tell Us About The Prospects For a BAT,” Feb. 27, 2017.

The Texas perspective:
The Dallas Morning News, “This key tax proposal is on ‘life support’ or just getting started — depending on which Texan you ask,” Feb. 27, 2017

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