Under the border tax, “American families — your constituents — would pay more so many multinational corporations can pay even less,” Cornell said.
The levy, part of a larger tax reform plan proposed by House Republicans, aims to support U.S. manufacturing companies by imposing a surcharge on foreign-made goods imported into the United States, while providing a credit for exports.
Most retailers have opposed the tax, saying it would increase their tax rate significantly, forcing them to raise prices. Cornell testified that the border adjustment tax would boost Target’s tax rate to 75%, and increase prices paid by consumers by 20%.
The National Association of Chain Drug Stores has joined a coalition called the Americans for Affordable Products, which opposes the tax.
“The Border Adjustment Tax is not simple or fair,” the coalition wrote in a letter to Congress earlier this year. “It proposes a massive tax increase on consumers and would result in increased costs on everyday necessities like food, clothing, gasoline and prescription drugs — necessities that Americans rely on daily — by as much as $1,700. It is really a ‘cost of living tax’ that will make the lives of millions of middle-class Americans harder and more expensive.”
Members of the coalition include Walgreens Boots Alliance Inc., Dollar General Corp. and Walmart, and such trade groups as the National Retail Federation, National Grocers Association and Food Marketing Institute.
Proponents of the border adjustment tax say it would boost U.S. manufacturing and create American jobs. The president and CEO of agribusiness giant Archer Daniels Midland Co., Juan Luciano, testified in favor of the tax, arguing that it would make American companies more competitive. Also speaking out in favor of the bill was former Walmart chief executive officer Bill Simon.
“We will see more good middle-class jobs, a robust U.S. economy and an era of growth that will be led by a new industrial revolution,” Simon told the committee.
Some of the proponents of the tax have argued the policy will lead to a significant appreciation of the dollar, offsetting the impact on U.S. businesses and consumers.
Cornell disputed that idea, arguing that the levy would wager “paychecks on an unproven theory.”
And the Retail Industry Leaders Association cited an economic report by the international macroeconomics firm Capital Economics, which said that the theory was based on a “gross simplification” of today’s currency markets.