In order to back a House Republican plan to tax all imports and saying the proposal would “support American jobs and American-made products”, U.S. companies including major exporters General Electric Co and Boeing Co launched a coalition.
Including companies like Dow Chemical Co, Eli Lilly and Co Pfizer Inc, and Oracle Corp, the group, comprised of more than 25 U.S. companies and dubbed the “American Made Coalition.”
Proposals like cut corporate income tax to 20 percent from 35 percent, exclude export revenue from taxable income and impose the 20 percent tax on imports have created a growing division in corporate America over the House Republican proposals and the group’s launch underscored that divide.
The House proposal could face difficulties in the U.S. Senate where some Republicans question whether it would unduly raise prices for U.S consumers and businesses and President Donald Trump has sent mixed signals about border taxes.
A border tax would outweigh the benefit of a lower headline corporate tax says companies that rely heavily on imports, such as retailers Target Corp and Best Buy Co Inc. Companies that are purely domestic U.S. concerns and other companies that are net exporters say they would benefit.
“American workers and businesses are not competing today on a level playing field with foreign competitors because of an outdated and unfair tax system,” said John Gentzel, a spokesman for the coalition. The current tax system unfairly subsidizes imports of foreign goods, the group said.
The group supports the House Republican blueprint, said David Lewis, Lilly’s vice president of finance and corporate tax, in a statement.
To save the Export-Import Bank, a government-backed loan program that helps foreign buyers purchase American exports, many of the companies in the coalition – including Boeing and GE – successfully formed their own group in 2015.
A separate coalition on Wednesday to fight the House Republican proposal known as the “border adjustment” tax was launched in the meanwhile by the Retail Industry Leaders Association, which represents more than 120 trade associations and companies.
“The border adjustable tax is harmful, untested, and would put American retail jobs at risk and force consumers to pay as much as 20 percent more for family essentials,” said Sandy Kennedy, president of the group.
Fearing that a big tax on imports would hurt the sales and profits of companies and put them at a disadvantage to rivals more reliant on U.S.-made products, retailers, oil refiners and foreign automakers including Toyota Motor Corp have been lobbying with Congress to put forward their stand.
There were reports this week that Best Buy has used an analyst forecast that a 20 percent tax would wipe out the company’s projected annual net income of $1 billion and turn it into a $2 billion loss and has circulated the same to lawmakers.
(Adapted from Reuters)