The Senate Finance Committee and the House Ways and Means Committee recently decided to move forward with tax reform without the inclusion of the Border Adjustment Tax (BAT).
“And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base,” members of Congress and the Trump Administration said. “While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”
The decision was applauded by the Motor & Equipment Manufacturers Association (MEMA).
MEMA had commissioned a study earlier this year on BAT. Conducted by Boston Consulting Group, results were released this month.
A 15 percent BAT would have resulted in American suppliers and automakers seeing costs increase $22 billion, paying $34 billion in import taxes while only generating $12 billion in export taxes.
The top 12 original equipment manufacturers would have seen an average of a $1,000 increase in vehicle manufacturing. If the BAT was 20 percent, this would have increased to $1,800 per vehicle.