Robert Reich in Salon:
Watch your wallets. Republicans are pushing a new corporate tax plan that will end up costing most of you a bundle. Here’s what you should know about the so-called “border adjustment tax.”
Our current tax code taxes corporations on their profits. So, for example, when Wal-Mart buys T-shirts from Vietnam for $10 and sells them for $13, Wal-Mart is only taxed on that $3 of profit.
But under the new Republican tax plan, Wal-Mart would be taxed on the full price of imported items, so in this case the full $13 sale price of that T-shirt. As a result of this tax, Wall Street analysts expect retail prices in the United States to rise as much as 15 percent.
Its burden will fall mainly on the poor and middle class because they already spend almost all of their incomes, so they’ll feel the greatest pain from higher retail prices.
97% of all clothing and shoes in the US are imported. Nearly all retail items bought by US shoppers are either wholly or partly produced overseas because this is the cheapest way for companies to make goods. So this tax will not bring manufacturing jobs back to America, but that is how they are going to sell it.
It is ostensibly a way to encourage companies to produce their goods in the United States and boost exports (no tax on those). The issue is dividing Republicans because some support the tax break on exports, but Walmart is leading a coalition of retailers against it.
Republicans always find a way to hit working people. Trump’s voters thought he was different.