Policy

Ryan to Sell Tax Overhaul Benefits in Ohio

But business leaders remain wary of border adjustment tax proposal

House Speaker Paul Ryan, left, walks to the House floor in the Capitol for the vote on the Republicans’ health care legislation. (Bill Clark/CQ Roll Call)

House Speaker Paul D. Ryan is taking his sales pitch for a tax overhaul on the road with a high-profile stop Wednesday in Ohio, where lobbying groups have mobilized against one of the Wisconsin Republican’s signature proposals.

Ryan, during an event with local manufacturers in New Albany, will argue that a mega tax bill “will create good jobs and bolster American manufacturing,” according to a notice of the event. But the speaker’s ability to ultimately seal the deal depends on how President Donald Trump comes down on the most controversial elements of the blueprint and whether he, like Ryan, will rally support for the overhaul.

Some Ohio business leaders already say the House Republican’s plan to impose a new 20 percent levy on imports as a way to finance the overhaul would make the package unpalatable because it would raise the price on consumer goods. The proposal, dubbed a border adjustment tax, or BAT, would raise $1.2 trillion over a decade.

“Imports and exports are not a zero-sum game,” said Domenic Federico, president of BriskHeat Corporation in Columbus, Ohio.

The border adjustment plan, he said, would make his semiconductors “noncompetitive” and could cause the company, which employs more than 250 people, to scale back its Ohio workforce by 25 percent. Federico noted that BriskHeat also operates a factory in Vietnam.

“We believe it’s a tax that would be detrimental to our business,” Federico said during a news conference call organized by the Keep America Affordable Coalition, which opposes the BAT.

Ohio Republican Reps. Pat Tiberi and Steve Stivers plan to attend the Ryan event Wednesday afternoon, along with local manufacturers and other business leaders such as Tara Abraham, CEO of Accel Inc., which is hosting the forum, and Rod Harl, president of Alene Candles.

The Ryan roadshow comes two weeks after the Trump administration issued a one-page document on its tax overhaul principles, which called for reducing individual rates, with a top rate of 35 percent, and lowering the rate for all businesses regardless of how they’re organized to 15 percent.

“This is just an opening sales pitch for tax reform, but Speaker Ryan will talk about the enormous opportunity we have before us,” said a source with direct knowledge of the event, speaking on condition of anonymity. “He supports the principles President Trump laid out on reform and will stress how we cannot afford to miss this moment. Speaker Ryan will discuss reform for both individuals and businesses, and how we must level the playing field so American companies can create good-paying jobs here in the U.S.”

Longtime tax lobbyist Ken Kies, a former chief of staff at the Joint Committee on Taxation, said Ryan is “clearly the most articulate spokesman” for the House GOP leadership’s tax blueprint.

“And if your sales pitch is to do the BAT because we’ll build it in America, Ohio’s probably a pretty good place to go,” he added.

Border adjustment tax

But Kies and other tax policy wonks say they are waiting for the Trump administration to weigh in definitively on the BAT proposal and other major elements of the plan. Trump told The Wall Street Journal in January the border adjustment proposal is “too complicated,” and Treasury Secretary Steven Mnuchin said recently the administration will look at revisions.

“Until the president makes a call on this thing, we’re not going to really know where we’re going,” Kies said.

Some top opponents of the BAT said they’re optimistic because numerous GOP senators have announced they’re against the idea, and they took comfort that the administration’s one-pager on tax overhaul principles did not include the border levy. 

“That’s encouraging to us,” said Tim Phillips, president of Americans for Prosperity, part of the conservative Koch brothers’ political network. “We are going to continue detailing the disastrous impact that the House leadership border adjustment tax plan would cause for American consumers.”

Though Americans for Prosperity, like retailers nationwide, supports a tax overhaul generally, the group has been running ads against the border adjustment plan and mobilizing its grass-roots networks around the country.

“The policy is a bad one for consumers, but also politically, it would be devastating for members to have to go home and defend raising taxes by $1.2 trillion,” said Phillips, citing the estimated revenue that could be generated by the BAT. “Our message to House members is: This BAT is not going to make it out of the Senate, so don’t walk the plank in the House.”

Lobbyists for the retail industry, which has led the charge against the BAT proposal, say they believe Ryan will broadly define the benefits of a tax overhaul.

David French, senior vice president for government relations at the National Retail Federation, called the House GOP plan a “radical” way of doing an overhaul and one that would be “politically very challenging.”

“We would prefer they adopt a more traditional income tax reform plan,” French said. “ We’re speaking very loudly about how challenging that would be for the growth prospects for the U.S. economy. We also completely agree with Speaker Ryan and the president that we need tax reform. We’re trying to get it done in the most expedient way possible — and that’s without border adjustment.” 

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