New Tax Will Drive Up Prices, Cost Average Family $1,700, and Destroy Jobs
BETHESDA, MD – February 2, 2017 – The Auto Care Association has joined Americans for Affordable Products (AAP), a growing coalition of businesses and trade associations that represents millions of American jobs, today to stop the Border Adjustment Tax (BAT). The Auto Care Association represents the entire independent auto repair industry supply chain, including manufacturers, distributors, retailers and service and repair businesses, which employs 4.2 million people.
AAP is running a national campaign to mobilize consumers and show lawmakers that a discriminatory tax on imports will result in their constituents paying higher prices for everyday items such as food, gas, auto repair, clothing and medicine, and should not be included in tax reform.
The BAT, which is a component of the U.S. House Republican tax reform proposal, will significantly hurt American consumers and the nation’s largest employers by increasing the cost of everyday products. The BAT, which would function as a national sales tax, could drive the unemployment rate back to the 2010 highs in the aftermath of the financial crisis.
“The Border Adjustment Tax is an immediate threat to economic viability of thousands of small, family-owned businesses in the auto care industry," said Bill Hanvey, president and CEO, Auto Care Association. “We have a complex supply chain throughout the country that distributes the right auto part to the right place at the right time, so that the American consumer can keep their vehicle on the road. The effect of the BAT will rapidly be felt by the consumer, and will bring real, downward pressure on growth, planning and employment in the industry.”
According to the National Retail Federation, upon passage, the BAT will cost American families as much as $1,700 per year. Middle class and low-income families who have seen their wages stagnate in recent years would bear the brunt of this new tax because they spend a larger share of their income on tradeable goods that would be hit by the BAT.
While the Auto Care Association and Americans for Affordable Products oppose the BAT, they recognize the hard work among members of Congress to reform the tax code and support the overall effort and hope it can be achieved without hurting middle class American families.
Several Key BAT Opponents:
Trump Campaign Senior Economic Adviser Larry Kudlow: “‘This is an exercise in government planning and complexity that I believe is doomed to fail,’ conservative television commentator Larry Kudlow said of Ryan’s proposal on CNBC last week. Kudlow helped write Trump’s tax plan … ‘I think the whole corporate tax reform, which is the most important pro-growth measure, will go down the drain over this.’” (Rachael Bade, “How Trump Keeps Trampling On Hill GOP’s Big Plans,” Politico, 1/17/17)
Americans for Prosperity President Tim Phillips: “Americans for Prosperity will be making the House GOP’s border adjustment plan for tax reform a Rubicon for congressional Republicans to cross at their own risk. ‘There is a strong disagreement over border adjustment tax, which is really a tariff,’ AFP’s president, Tim Phillips, said in a call with Politico. ‘This is something we’re going to fight tooth and nail.’ How tooth and nail? Phillips says the group isn’t ruling out attack ads or backing primary challengers of Republicans who back that sort of proposal, even though the group likes most of the House GOP plan. ‘We have a history of following up,’ he said, and ‘holding accountable’ members who don't see eye-to-eye with the group. AFP’s network members from across the country have already started stopping in to their House members’ offices to lodge their opposition to the provision, Phillips said – going as far as to compare the effort to the group’s fight against Obamacare. Whether the group will get assistance from Trump – who criticized the House Republican plan recently, before walking it back somewhat – is another question.‘We certainly hope so,’ Phillips said. ‘It would harm so many of the people who are the core of his constituency’ … ’It will take the country and the Republican Party back a century to protectionism and again, tariffs,’ said Phillips, who added that it would lead to a loss of purchasing power for ‘millions of Americans.’” (Bernie Becker, “Mnuchin Unruffled,” Politico Morning Tax, 1/20/17)
Club For Growth President David McIntosh: “House Republicans now have a prime opportunity to undertake corporate tax reform, and they’ve proposed some pro-growth ideas, including rate reductions, incentives for investment, and reform in how purchases are expensed. Unfortunately, all of that good reform could be wiped out by a separate complicated proposal from the House GOP that amounts to a costly new consumer tax called the Border Adjustment Tax (BAT) … It’s another case of Washington creating winners and losers, instead of doing what’s necessary to reduce taxes across the board: Congress must do the hard job of actually cutting the size of the federal government and its spending, instead of gaming the tax code to create costly offsets … There’s no debate over the fact that Congressional Republicans must do pro-growth tax cuts across the board. The Tax Foundation has projected that Trump’s tax overhaul would produce about 7% in economic growth. The corporate tax rate needs to be lowered, with incentives for investment. But Congress also needs to dramatically cut federal spending, and not simply substitute a new consumer tax to feed Washington’s endless demand for more revenue.” (David McIntosh, “Let’s Bury The Idea Of A Border Adjustment Tax,” Investor’s Business Daily, 1/20/17)
Forbes Media Chairman and Editor-In-Chief Steve Forbes: “REPUBLICANS in the House of Representatives are inadvertently setting a nasty political and economic trap for Donald Trump. Yes, it’s the Republicans, not the Democrats, who are ready to administer an unnecessary black eye to the new President. That’s not their intention, but it manifestly will be the result. The vehicle for this unwitting GOP punch is a new exaction called the border adjustability tax. This levy will cost American consumers at least a trillion dollars over the next ten years. Knowing how Washington politicians calculate these things, you can bet the amount will end up being considerably more. Prices for everyday items, such as socks, shoes and household appliances, will go up. So will tech devices like the iPad, not to mention automobiles and trucks. Gasoline? Millions of Americans will pay an additional 30 cents or more per gallon at the pump. Lower-income and struggling middle-class Americans will get hit the hardest.” (Steve Forbes, “OMG! House Republicans Are Preparing To Hit Consumers With A Horrible New Tax That Will Harm Trump And Hurt The Economy,” Forbes, 1/11/17)
About the Auto Care Association
Based in Bethesda, Md., the Auto Care Association has nearly 3,000 member companies that represent some 150,000 independent automotive businesses that manufacture, distribute and sell motor vehicle parts, accessories, tools, equipment, materials and supplies, and perform vehicle service and repair. Visit www.autocare.org.