Border tax plan and EU challenge

Representative Kevin Brady the Republican from Texas and who is the chairperson of House Ways and Means Committee, with the power to change taxes, has said that the United States can dominate any challenge. There are a number of news reports that the trading partners of the United States and the European Union may challenge the proposal of leaders from the White House to overhaul the country’s corporate taxes.

Border adjusted tax

Representative Brady said that he totally expects that other nations will challenge the United States for a proposal on “border adjusted” tax. Paul Ryan, the speaker of the House, also supports the plan. This scheme calls for taxing the imports and domestic sales of US companies. Exports, however, will be exempted from such tax. Brady said that it is invariable that other nations will challenge such a step as this will mark the end of their tax honeymoon.

Both Ryan and Brady are of the opinion that the United States is currently at a disadvantage by the present corporate income tax. They say that other nations impose value added taxes. This makes the countries which levy the value added taxes, to make the border adjustments which impose taxes on imports. Their own exports continue to be exempted from taxes. In his interview to the media, Brady told scribes that thanks to these policies, products manufactured in the United States suffer from tax disadvantages. These disadvantages are found not only in the United States but also outside the country as well.

The concept of the newly crafted border adjusted tax has been met with strong resistance from oil refiners and retailers among a number of other industries. All these industries are reliant on imported materials or goods. It is not clear whether President Donald J. Trump supports these plans. To put in perspective, he himself has shown the inclination to craft tax proposals.

Questions by the Senate

Senator Orrin Hatch the Republican from Utah and who is the chairperson of Senate Finance Committee, told the media on February 13 that he has a number of queries concerning the proposal of border adjusted tax. It has been reported that US trading partners like the European Union are preparing themselves to legally challenge the plan, They would argue that these new plan will seriously disadvantage their exports. Any kind of challenge may result in a biggest ever case before World Trade Organization or WTO.

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