Posts Tagged ‘border-adjustment’

Ryan Talks Up Likelihood of Tax Overhaul

June 20, 2017

In a speech and a series of cable appearances, the House speaker will try to build momentum for the Republicans’ plan to enact a broad set of tax-policy changes

House Speaker Paul Ryan (R-Wis.) will deliver a speech to the National Association of Manufacturers in Washington on Tuesday.

House Speaker Paul Ryan (R-Wis.) will deliver a speech to the National Association of Manufacturers in Washington on Tuesday. PHOTO:JEFF MALET/NEWSCOM/ZUMA PRESS

June 20, 2017 12:01 a.m. ET

WASHINGTON—House Speaker Paul Ryan (R., Wis.) on Tuesday will express continued confidence that Republicans can deliver a groundbreaking set of tax-policy changes this year, despite a long list of hurdles in front of them.

Mr. Ryan, in a speech to manufacturers in Washington, isn’t expected to delve into the details that divide Republicans or the negotiations between the Trump administration and members of Congress.

“We need to get this done in 2017,” he will say, according to excerpts distributed by his office. “Transformational tax reform can be done, and we are moving forward.”

Mr. Ryan’s speech to the National Association of Manufacturers, sandwiched between cable news appearances, is meant to build momentum and public support for the party’s aims. Republicans face significant obstacles, but many see a tax overhaul as a political necessity that would deliver on one of their core campaign promises. For now, taxes are secondary to health care and other policy issues. But the GOP is planning a busy fall.

Tax policy would gain momentum if Republicans can pass a health law that repeals parts of former President Barack Obama’s Affordable Care Act and cuts hundreds of billions of dollars in taxes that wouldn’t have to be addressed as part of a tax plan. Failure on health care would create complications for a tax bill, but it might also create a new sense of urgency.

Among the current challenges facing Republicans:

• The biggest is internal opposition—particularly in the Senate—to Mr. Ryan’s plan to add a border adjustment to the corporate tax, which would tax imports and exempt exports. Mr. Ryan has acknowledged the concerns, but he is also forging ahead in the absence of an alternative.

The border adjustment, Mr. Ryan argues, wouldn’t just provide an estimated $1 trillion over a decade to pay for lower tax rates. By basing taxes on sales instead of profits, it would also act as a backstop to prevent companies from shifting profits abroad in a system where the U.S. stops taxing companies’ foreign income.

“We are actually unique in the world in the way we discourage capital from coming back to America and how we incentivize offshoring jobs,” Mr. Ryan will say Tuesday. “We must think differently, so that once again we make things here and export them around the world.”

• Republicans also have to decide whether they want a tax cut or a revamp of the system that would leave federal tax collections roughly unchanged. Conservatives and some parts of the Trump administration favor a tax cut. Mr. Ryan and Senate Majority Leader Mitch McConnell (R., Ky.) have said they favor a so-called revenue-neutral approach—meaning that total taxes wouldn’t change much while rates get lowered and some breaks vanish—after counting revenue generated by the tax plan’s economic effects.

• Intra-Republican disputes threaten the GOP effort with every trade-off. Just this week, seven House Republicans from New York and New Jersey signed a letter asking the administration—and by extension, the speaker—to reconsider a plan to repeal the deduction for state and local taxes.

• To even get to tax policy, Republicans will have to pass a budget that allows them to use reconciliation, the procedural tool that enables a simple majority vote in the Senate. That will require bridging gaps between Republicans who emphasize spending cuts and those who want to spend more on the military.

• Then there is a pile of narrower issues that will crop up as Republican members find their home-state and home-district industries objecting to pieces of the tax bill.

The result may not be the tax plan Mr. Ryan first laid out a year ago or a copy of the temporary tax cuts that President George W. Bush pushed through in 2001 and 2003. But Republicans say they are determined to do something ahead of next year’s primaries and midterm elections.

Write to Richard Rubin at



U.S. fails to reassure Europe, Japan over ‘Trumponomics’

May 14, 2017


Sat May 13, 2017 | 2:23pm EDT

By David Lawder and William Schomberg | BARI, ITALY

The United States said on Saturday the world’s other rich economies were getting used to the policy plans of President Donald Trump, but Europe and Japan showed they remained worried about Washington’s shift.

Officials from the Group of Seven nations met in southern Italy hoping to hear more about Trump’s plans which they fear will revive protectionism and set back the global approach to issues such as banking reform and climate change.

U.S. Treasury Secretary Steven Mnuchin said the United States reserved the right to be protectionist if it thought trade was not free or fair.

“We do not want to be protectionist but we reserve our right to be protectionist to the extent that we believe trade is not free and fair… Our approach is for more balanced trade, and people have heard that,” Mnuchin told reporters at the end of the two-day meeting.

U.S. Secretary of the Treasury Steven Mnuchin attends a news conference during a G7 for Financial ministers, in the southern Italian city of Bari, Italy May 13, 2017. REUTERS/Alessandro Bianchi

“And as I say, people are more comfortable today, now that they’ve had the opportunity to spend time with me and listen to the president and hear our economic message.”

Other ministers from the G7 countries made it clear they did not share his view.

“All the six others … said explicitly, and sometimes very directly, to the representatives of the U.S. administration that it is absolutely necessary to continue with the same spirit of international cooperation,” French Finance Minister Michel Sapin told reporters.

Bank of France Governor Francois Villeroy de Galhau said there was a “light breeze” of optimism within the G7 about the recovering global economy after years of sluggish growth following the financial crisis that began nearly a decade ago.

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But he said the continued uncertainty about the direction of U.S. policy represented a risk, echoing comments made on Friday by Japanese Finance Minister Taro Aso.

“We must not backpedal on free trade as it has contributed to economic prosperity,” Aso said.

European G7 officials complain that no-one knows what the United States understands by “fair trade” and that the only way to establish fairness was by sticking to the rules of the World Trade Organization – a multilateral framework.

They also say the U.S. demand to balance trade bilaterally was not economically sound, because trade deficits and surpluses could only be analyzed in a global context.

A senior Japanese finance ministry official said on Saturday uncertainties remained over how quickly the U.S. Federal Reserve would raise interest rates, but the biggest question mark was over possible U.S. tax cuts that could fire up an already recovering U.S. economy.

Trump has proposed slashing the U.S. corporate income tax rate and offer multinational businesses a steep tax break on overseas profits brought back home.

He dropped, however, a controversial proposal of a “border-adjustment” tax on imports as a way to offset revenue losses resulting from tax cuts.

The tax reform plans were also questioned by some European officials. “I am not so sure that with an economy already at full employment and working at full speed a fiscal stimulus would add a lot,” European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters.

“(But) we avoided some discussions which would have been more damaging, like the border adjustment tax, which is no longer on the table at this moment,” he said.

(Writing by Jan Strupczewski)