On Thursday the Trump White House sent up a trial balloon, suggesting it could fund its border wall through a tax on goods imported from Mexico. Many congressional Republicans welcomed the idea, which they saw as a policy victory.
Some saw White House press secretary Sean Spicer’s words to reporters on Air Force One, which caused controversy before being described by chief of staff Reince Priebus as one of a “buffet of options”, as an embrace of the tax reform goals of House speaker Paul Ryan.
“The plan that’s taking shape now,” Spicer said, would use “comprehensive tax reform as a means to tax imports from countries that we have a trade deficit from, like Mexico.
“If you tax that $50bn at 20% of imports … right now our country’s policy is to tax exports and let imports flow freely in, which is ridiculous … we can do $10bn a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding.”
Spicer also said the Trump administration had “been in close contact with both houses [of Congress] in moving forward and creating a plan”, adding: “It clearly provides the funding and does so in a way that the American taxpayer is wholly respected.”
At a party gathering in Philadelphia, House Republicans interpreted Spicer’s statement as an endorsement for their broader plan to overhaul the corporate tax system by implementing a border adjustment tax, long championed by Ryan, which would only tax goods imported into and sold in the US. Under the plan, the resulting revenue would be used to reduce the corporate tax rate from 35% to 20%.
“I was pretty happy that he did that,” said California representative Devin Nunes, “because this is something that US should have done a long time ago.”
He added: “This border adjustment issue is a critical part of tax reform.”
A Hill Republican source agreed, telling the Guardian: “Spicer’s comments are consistent with the border adjustment proposal, an idea included in the House GOP’s Better Way tax plan.”
“The 20% referenced by Spicer,” the source said, “is the corporate tax rate that applies to goods and services consumed in the US but not applied to goods and services exported.”
Even Grover Norquist, head of Americans for Tax Reform and author of the group’s famous pledge against raising taxes, welcomed Spicer’s words.
“Spicer just announced that border adjustability – once thought to be a sticking point for coming to agreement on fundamental tax reform – is now a consensus item,” Norquist said.
“This statement means we are very close to enacting fundamental tax reform.”
In Norquist’s opinion, “the entire package is a dramatic reduction in taxes and therefore certainly not a violation of the Taxpayer Protection Pledge”.
Not all Republicans embraced the proposal. Senator Ben Sasse of Nebraska, an ardent critic of Trump, tweeted simply: “Tariffs are a tax on American families.”
This sentiment was echoed by Senator Lindsey Graham of South Carolina, who tweeted his thoughts in more colorful terms: “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad.”
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