In a Thursday interview, the president appeared to reverse his position on a crucial provision of House Republicans' tax reform plan.
President Donald Trump, his wife Melania and House Speaker Paul Ryan, R-Wis., sit at the U.S. Capitol on Nov. 10 in Washington, D.C. (NICHOLAS KAMM/AFP/GETTY IMAGES)
President Donald Trump appeared to embrace a border-adjustment provision of the House GOP tax plan during a wide-ranging interview with Reuters this week – a sign he may be getting on the same page with congressional Republicans in their push for tax reform.
Trump's conversation with Reuters covered a lot of ground, touching on topics like North Korea, nuclear buildup, relations with Russia, trade with Mexico and job creation.
But the president's warm rhetoric regarding a border-adjustment tax was new. The tax plan he championed during election season didn't include such a mechanism, which effectively levies taxes on imports while allowing U.S.-based companies to export goods tax-free.
And while his administration appears to have floated a border-adjustment tax targeting Mexico as a possible way to fund a wall along the southern border, Trump himself hasn't exactly been openly supportive of the GOP's plan.
"It's too complicated," Trump said during an interview last month with The Wall Street Journal. "I don't want that. I just want it nice and simple."
"Anytime I hear border adjustment, I don't love it," he said in January. "Because usually it means we're going to get adjusted into a bad deal. That's what happens."
Trump appeared to change his tune in his Thursday interview, however, saying that a border-adjustment plan "could lead to a lot more jobs in the United States."
"I certainly support a form of tax on the border, because everybody else does," Trump told Reuters. "We're the only country – we're one of the very few countries, possibly the only country – that has no border tax."
Trump has repeatedly lashed out at companies for moving operations offshore, and said a border-tax plan could reverse that trend. In a nutshell, the GOP's plan would prevent companies from deducting import costs from their revenue to reduce their tax burden. At the same time, it would allow exporters to sell abroad without paying duties to the U.S. government.
Advocates hope such a reform would encourage more companies to manufacture products on U.S. soil while encouraging Americans to buy more locally produced goods, considering the prices of imports are expected to go up for domestic consumers, at least initially.
Trump in his interview said a border tax is "not a tax to the consumer, because that's going to be a tax to companies and it's going to be a tax to other countries much more so than it is to the consumer."
Still, experts generally believe consumers would pay higher prices on imports under such a plan. The GOP has suggested the dollar would strengthen further should border adjustment go into effect, essentially offsetting price increases for U.S. consumers. But it's unclear exactly how long that currency adjustment would take to play out and whether other unintended consequences would arise.
And although Trump said that "there is no tax if we make our product in the United States," that's not entirely correct, at least per the terms of the GOP's plan. Companies wouldn't pay taxes on exports they manufacture on U.S. soil, but if they decide to sell in America, they'd still be hit with corporate taxes. And they'd be on the hook for taxes in whatever export market they ship to.
Trump's Reuters interview suggested he wasn't entirely on the same tax page with Republicans on Capitol Hill – he still said corporate taxes would likely be "anywhere from 15 [percent] to 20 percent," down from their current 35 percent. GOP lawmakers generally are aiming for the higher end of that range, while Trump has suggested he wants business tax rates closer to 15 percent.
But his seeming acceptance of a border-adjustment plan represents progress for tax-minded House Republicans, as the adjustment mechanism would be one of the more extensive and potentially controversial moves included in their tax plan.
<script async src="//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script>
<!-- Posts Code -->
<ins class="adsbygoogle"
style="display:inline-block;width:336px;height:280px"
data-ad-client="ca-pub-5855452198690297"
data-ad-slot="9828697969"></ins>
<script>
(adsbygoogle = window.adsbygoogle || []).push({});
</script>
Trump also seemed to suggest he hoped to move quickly on tax reform, only a day after Treasury Secretary Steven Mnuchin said he didn't expect anything comprehensive to be passed until August or later.
"We're mandated to do the health care first. We have to. And that's for budgetary reasons. So the health care will come first," Trump said, suggesting he and lawmakers would make some move on health care reform "before the middle of March." "It'd be repeal and replace. ... The tax reform comes immediately thereafter."
