After months of uncertainty, a controversial tax plan is dead.
Last Thursday, Trump administration officials and top congressional lawmakers said in a joint statement the border-adjusted tax will no longer be part of the ongoing negotiations for tax legislation.
In part, the statement read, “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”
In 2016, House Republicans released a tax plan, “A Better Way,” part of which lowered the corporate tax rate to 20 percent and converted it into a destination-based cash-flow tax (DBCFT). A significant feature of this plan was the border adjustment, which applied the tax to imports and exempts exports. Supporters of the plan wanted to eliminate the so-called “Made in America” tax by eliminating the ability of companies to deduct the cost of imports and also eliminate the tax on income attributable to exports.
As a result of pulling the plug on the border tax, lawmakers are going back to the drawing board. The statement outlined that it’s now the responsibility of committees in the House and Senate to take up the issue of crafting new tax legislation.
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