05/2017 KIPLINGER’S PERSONAL FINANCE 11AHEADAFTER GRAPPLING WITH
your own tax return, you
probably haven’t given a
lot of thought to how much
Apple and ExxonMobil pay
Uncle Sam. But a Republi-
can plan to reengineer the
corporate tax code could
have a direct impact on
your bottom line. How
much? That depends on
whom you talk to and
where they stand on the
border adjustment tax.The border adjustment
tax would eliminate taxes
on income from products
sold outside the U.S. while
removing tax deductions for
the cost of imported goods,
which would effectively im-
pose a 20% surcharge on
imports. Proponents say the
change would encourage
companies to make prod-
ucts in the U.S., thus gener-
ating more jobs. The tax on
imports would raise an esti-mated $1 trillion over 10
years, enabling the govern-
ment to cut corporate tax
rates—currently, the highest
in the world—from 35% to
20%. Chief executives of
companies that are big ex-
porters, such as Boeing,
Caterpillar and Pfizer, are
big fans of the BAT. They
say the current business tax
code gives an unfair advan-
tage to foreign competitors
and foreign-made goods.
But chief executives from
Wal-Mart, Target, Macy’s
and dozens of other retail-
ers contend that the BAT
would increase the cost of
just about everything by up
to 20%. For most consumers,
switching to items made
in the U.S. isn’t an option.
About 97% of the clothesand 98% of the shoes sold
in the U.S. are made over-
seas, according to the Amer-
ican Apparel and Footwear
Association. “Whether it’s
the automobile you drive,
the gasoline you use, the
groceries you put on the
table, or the shoes and the
clothes you put on your feet
and back, the prices of all of
those things will get driven
up by the border adjustment
tax,” says National Retail
Federation chief executive
Matthew Shay. The BAT
has strong support from
House Republican leaders
but faces headwinds in the
Senate, where some Repub-
lican lawmakers have ex-
pressed concern about how
it will affect big retailers.
The plan’s supportersHOW A BORDER TAX
WOULD AFFECT YOU
A plan to limit imports could raise prices
but also create more jobs. BY SANDRA BLOCKTOPIC AROSE BLAKE