February 13, 2017

WE ARE ALL NEOCONOMIST NOW:

Border Tax Adjustment Is Not Protectionist, Boosts Free Trade (ERNEST S. CHRISTIAN, February 8, 2017, National Review)

By gaining quick congressional enactment of the tax reforms in the Ryan-Brady GOP blueprint, "A Better Way for Tax Reform," President Trump can in months accomplish historic reforms that have for decades eluded other presidents and Congresses. Furthermore, the economic burden of the blueprint's roughly $1 trillion import-tax adjustment will for a combination of reasons fall partly on foreign companies that export into the U.S. market. If President Trump uses that $1 trillion of import-tax revenue to finance a big cut in U.S. income-tax rates, he can, in effect, require foreigners indirectly to help pay for the reduced income taxes on Americans. A good deal for America. [...]

By taxing imports excluded from value-added tax by the country of origin and by not taxing exports that are taxed by the country of destination, the GOP's proposed border tax adjustments would help level the international tax playing field. This would be a good thing for free trade and should be applauded as such.

Even though some portion of the import-tax adjustment will probably be borne by some U.S. companies, and some consumers might pay a little more for some imports that are now subsidized, almost everyone should be better off overall, by a wide margin, when we consider the Ryan-Brady proposal as a whole. It provides an enormous tax cut for businesses and individuals, about $2.4 trillion over ten years before taking into account feedback revenues from $14.4 trillion of reform-induced additional economic growth for the same period.

A big across-the-board tax cut and a surge in jobs, income growth, and consumer spending is hard to beat.

Posted by at February 13, 2017 12:32 PM

  

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