Trump is living in a fantasy world full of fake news, fake facts and now fake profits. The fact that the Republican Party is seriously discussing the border adjustment tax proposal shows that the Grand Old Party has gone insane, I mean BAT shit. It also raises the question of “Who is behind this crazy bad idea and why is the ‘conservative’ Heritage Institute pushing it?”. If you want a good explanation of how the border adjustment tax would work check out this video on the WSJ web site.
Think about a TV. We don’t make flat panel screens in America so there is no way to buy an ‘American’ TV. Under the BAT scheme, Best Buy would have to pay corporate income tax on the entire cost of procuring the TV from Korea or Japan. Under a border adjustment tax, the cost of the TV would be a FAKE PROFIT – because the TV is imported. If an 80″ TV costs $2,500 and $2,000 of that is the cost of the imported product then Best Buy will owe an extra $400 of tax (20% x $2,000), forcing them to increase the cost of the TV to $2,900 or 16% if they can pass along the cost of the tax increase to the consumer.
How does such a scheme help the American people? No one in America would have voted for Trump if he said “I guarantee that the cost of consumer goods will go up by more than 10% immediately if I am elected. You are not going to get a pay raise but America is going to be great because everything will cost more.” I guess we all didn’t understand that ‘great’ meant more expensive.
Studying this scheme one comes back again and again to the question, “Who benefits from such a crazy scheme?”
It is time to the Republican Old Guard to stand with the moderate Democrats for free trade. Free trade has made America great and prosperous. Mercantilism like a border adjustment tax will lead to a real Depression.
Businessmen make the worst Presidents. The last billionaire President was Herbert Hoover and look how well he did.