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GOP Blog Fails to Refute That Noem Can Save Families $1,700/Year by Opposing Border Adjustment Tax

The SDGOP spin machine is really working hard to deflect the Club for Growth’s criticism of Rep. Kristi Noem for not firmly opposing the Trumpy Border Adjustment Tax. Club for Growth claims that Smoot-Hawley measure would cost middle-class families $1,700 a year in increased prices on imported goods.

Noem-sponsored Dakota War College trots out a response from the Tax Foundation and Grover Norquist that justifies this tax increase as part of a larger Republican tax package that will allegedly save average families about $4,600 a year.

But Pat, Grover, Republicans, your response does not challenge the thesis of the Club for Growth position. Whether the Border Adjustment Tax is part of a larger tax-cut package or a standalone plan, passage of the BAT means average families will have $1,700 less in their pockets at the end of the year than they would if Kristi would just say, “BAT is bad,” right?


  1. John Kennedy Claussen, Sr. 2017-03-06 10:59

    There are quite a few contradictions and “cherry picking” moments in that Red State article as well as further conservative commentary about it, but what gets me is the dependence of that article upon a Reagan comment from 1975 on the Tonight Show with Johnny Carson, where Reagan more or less said that you cannot tax businesses because they can pass the tax unto their customers.

    Well, if that is the truth, then what true fear is there for conservative Republicans to support a corporate income tax in this state? Has not one of the best excuses for why we should not have a corporate income tax in South Dakota been because it would slow economic growth in this state and prevent businesses from moving here to create jobs? Apparently not, thanks to Reagan.

    Maybe that is why one of the best areas of business growth in this state over the past 35 years, which has had no true hinderance, has been the banking industry, which has had to deal with the realities of a franchise tax over the years, which itself is merely a fancy name for a corporate income tax for one particular field of business to begin…….Because this “franchise tax” (corporate income tax) obviously does not prevent economic development in our state, does it?….

    A course, this all requires one to take their economic knowledge from a second term governor who appeared on the Tonight Show, rather than from the sound economic thought of a Keynes from Cambridge, a Friedman from the University of Chicago, a Galbraith from Harvard, or a Krugman from Princeton…. And it also speaks of the often sophomoric and quick to judge acts of those who are often to eager to protect the rich and corporate America in particular at the cost of the average citizen or consumer….

  2. Roger Elgersma 2017-03-06 11:26

    This is exactly the tax on imports that Trump and Sanders came from the outside and did amazingly well. This would bring jobs back and raise wages. The higher wages would cover the 1700 per year. Do the Republican insiders like it, no, but the Republican members that voted in Trump did. Also there are union people who never voted republican before but did for this very reason. Can not ignore the people. Democrats need to realize that to ignore the worker on this issue was a huge mistake way back to Clinton and NAFTA. Wake up or our party keeps dying. We must remember the worker. They get the job done more than management does.

  3. Cory Allen Heidelberger Post author | 2017-03-06 15:48

    What jobs will this tax bring back to South Dakota, Roger? What jobs did Smoot-Hawley bring back to America in the 1930s?

  4. Chip 2017-03-06 21:01

    I think you make a reasonable point Roger. To ignore the fact that Bernie proposed the same type of import taxes would put Democrats on a pretty slippery slope. Dems need to frame their argument properly.

    One issue I have is that, as usual were the GOP is concerned, there is no incentive to pass any additional revenue onto employees. What will keep the “job creators” from pocketing any additional money and leaving the workers holding the bag as they have the last 30 years?

    My other issue is that it would require a 20% increase in the value of the dollar to offset the “$1700” price tag to American consumers. Our dollar is already too high to be supportive of exports. There are already countries like China devaluing their currency in order to spur exports. What happens if our dollar increases another 20%??

  5. Cory Allen Heidelberger Post author | 2017-03-07 05:45

    Again, let’s not fall too far for the false equivalency. Sanders shares Trump’s distaste for NAFTA and TPP, and he may have maintained some tariffs, but Sanders would not have coupled import tariffs with corporate tax breaks:

    I am perfectly willing to say that the tariff portion of Sanders’s economic policy was as counterproductive as Trump’s:

  6. Roger Elgersma 2017-03-07 13:59

    Cory, this tax would bring back the same jobs that left and will also make it possible for the wages to go up since unions could strike again without driving businesses out of country. If this is only for Mexico to pay for the wall then it is not a level playing field with all countries and should be shot down. If it is the same for all countries depending on how low their wages are, and if the tariff money was spent on paying off the debt, it would be a win win.

  7. Cory Allen Heidelberger Post author | 2017-03-07 16:44

    Roger, those same jobs won’t come back, not if they are manufacturing jobs. Check out the chart in this link:

    The interactive chart there shows manufacturing jobs spiking during World War II to make up over 38% of the U.S. workforce. That percentage dropped with increasing steadiness for the rest of the 20th century and into the 21st, with no apparent sudden dip in the mid-1990s when we enacted NAFTA. I can look at that curve and suggest the jobs were already rolling away.

    That steady decline seems to support your statement that just hitting Mexico with the BAT solves zero problems.

    But hitting everybody with the BAT just makes our stuff more expensive. Even if manufacturers decided to build everything here instead of paying the BAT, how long would it take them to move operations back to the U.S.? Build new factories, hire and train new workers… that’s a lengthy and expensive re-investment! It might be easier, cheaper, and faster for manufacturers to simply fire up their PACs, elect a bunch of Democrats who will impeach Trump in 2019, and then elect a sane free-trade President in 2020.

  8. Chip 2017-03-07 17:22

    As long as you’re consistent Cory. The important thing is to not leave gaping holes for Republicans to attack you. Draw clear lines and stick with them.

    I’m curious on a couple things though. I don’t see where corporate taxes are to be adjusted in this proposal. Also to claim false equivalency and support that position with an article that comes to this conclusion…

    “Yet in the grand scheme of things on the campaign trail, both men have consistently argued for protectionist trade policies as opposed to free trade. Some details differ, but they agree on the broad philosophy of opposition to free trade deals.

    We rate this claim Mostly True.”

    …seems strange to me. But you are consistent in believing that they are both likely flawed in their thinking, which is good. That’s what’s important.

  9. Cory Allen Heidelberger Post author | 2017-03-08 06:37

    Chip, the border adjustment tax by itself doesn’t cut corporate taxes, although it does include a provision exempting exporters’ profits. See this discussion:

    The Norquist/GOP argument excusing Kristi’s wishy-washiness is that BAT will be part of a larger package. But it does not matter if BAT is a standalone bill or Section 99 in a 100-section tax bill: the BAT increases prices for consumers. Kristi and Pat won’t admit that.

    Interestingly, the Wharton article linked here supports what Chip says about the dollar above. Pull dollars back, value of dollar goes up, and companies who stick with their overseas production and imports may find their increased purchasing power overseas cancels out the increased cost of bringing materials back into the U.S. Of course, if every company pursues such an offset, they increase dollar supply and bring the value of the dollar back down….

    Hey, wait a minute: does the BAT apply to all imports? What happens, then, to industries that rely on imports of raw materials that we don’t have in the U.S., like the rare-earth metals that go into electronics, or all those diamonds Trump buys for his ladies?

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