House Republicans continue to push the Border Adjustment Tax (BAT) as part of their “A Better Way” corporate tax reform proposal. Recently, President Donald Trump has made cryptic signals of support, although Trump’s Press Secretary has conflated the BAT with a border tariff in describing Trump’s support. Under the House Republican proposal, corporate tax rates would drop from 37.5 percent to 20 percent. However, to help cover the loss in revenue, the House proposal would also impose a Border Adjustment Tax. Under BAT (BAT Explained – Example 1, Example 2), imported materials and products would no longer be allowed to be deducted as part of a company’s Cost of Goods Sold (COGS). As a result, with 99 percent of fashion accessories sold in the United States being imported, a fashion accessories company’s tax base would increase dramatically under the proposal, even as the tax rate they pay on that base declines. For many companies, that means the resulting tax bill would be 3-4 times their current tax bill, in many cases, more than their profit (estimate your new tax here). As a result, FASA/Gemini has joined large swaths of the U.S. business community in the new Affordable Products Coalition to strongly oppose the BAT proposal. Congress is expected to consider corporate tax reform later this year. We need you! to speak up. Click here to tell your members of Congress to oppose the BAT proposal.
