It has been a tough year, but there is hope on the horizon and North…
Op-Ed by: Andy Ellen
President, NC Retail Merchants Association
There’s a proposal in Washington that takes direct aim at America’s most important job-producing industry with one trillion dollars in new taxes. The Border Adjustment Tax (BAT) is a provision that should never be considered as part of corporate tax reform by Congress.
As the voice for retail in North Carolina, the NC Retail Merchants Association, is extremely concerned with the BAT provision. It will have a significant and negative impact on North Carolina retailers and the retail industry, creating economic consequences that could devastate an industry that is an integral part of North Carolina’s economy as the state’s largest private employer – providing one out of four jobs.
Nationally, this $1 trillion sales tax on imports is an example of D.C. picking winners and losers among industries. The BAT discriminates against companies that use imports in their everyday business. Retailers and their customers would be hit very hard. This industry is responsible for 42 million US jobs, and since the depths of the Great Recession, retailers have created 1.6 million new jobs, while the manufacturing sector has added 800,000.
While economic theory suggests that the trade flow of imports and exports may balance out over the long run, when comparing exchange rates and price adjustments, there is no consensus as to the degree or the timing of these adjustments. In the near term, consumers would be left to pick up the significant tab while hoping that the economic theory proves out. If that isn’t enough of a reason to resist the BAT, local jobs in North Carolina communities created by small businesses and retailers would also be at risk.
If the BAT is enacted, retailers, especially small businesses in the sector, will be under threat of cutting jobs. Many could end up shutting down entirely. But the biggest victims of the BAT will be the working-class families who have seen their wages stagnate for more than a decade.
The proposal would impose taxes on imports like food, clothing, medicine, gasoline and other essentials our customers rely on daily. According to analysis by the National Retail Federation, this plan could cost the average family $1,700 in the first year alone if the border adjustment provision is enacted. This is a lot of money that struggling families simply don’t have. It is also important to note that this price-raising tax hike is being contemplated at a time when inflation is already skyrocketing. According to the Bureau of Labor Statistics, prices in January shot up to a four-year high, putting more pressure on family budgets.
The new Republican majority has a generational opportunity to fix the tax code and unleash the stronger economic growth America desperately needs. Tax reform is an important issue for retailers – they have the highest corporate tax rates of any industry. The United States lags behind most of the developed world in terms of corporate tax reform and retailers welcome almost any effort to reform the system. However, reforming our complicated tax code shouldn’t be done on the backs of middle-class Americans. New taxes, as part of tax reform, are not the right way to create jobs or spur economic growth.