The Trillion Dollar Tax No One is Talking About

The Trillion Dollar Tax No One is Talking About
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As the President of Reaching America, I spend every day talking about the complex social issues impacting the African American community. With all the attention surrounding Donald Trump, the FBI, and the Russian soap opera, the media is letting real news fall through the cracks. For example, how many of you have heard of the Border Adjustment Tax (BAT)?

The BAT isn’t that complex at all, but with all the distractions, it just isn’t being talked about in the Black community.

What is the Border Adjustment Tax?

According to CNBC, a Border Adjustment Tax would add up to a 20 percent tariff on goods that are imported into the United States.

The BAT will raise prices for every consumer in the country, and it will hurt low income individuals and minorities the most.

It would put $1 trillion new tax on pretty much everything companies in our country buys from companies in other countries. Meanwhile, it would give huge tax breaks to companies that export their goods. And you know those taxes will be passed down to the consumer.

A 20 perc BAT on imports would mean lots of things from fruits and vegetables grown in Central America, to clothes sewn in Taiwan, to cars made in Japan would jump by almost as much. The National Retail Federation predicts the tax would increase prices by about 15 percent across the board, costing the average family $1,700 a year.

That means every family that shops at Wal-Mart, Target, or other “big box” retailer, and even lots of your smaller mom-and-pop type stores, will be paying significantly higher prices on goods created in other countries.

Just the other day I took my son, Derrick, Jr., shoe shopping to buy him a fresh pair of sneakers. While we were checking out I was struck with the realization that almost every pair was made in another country, meaning they’ll all be even more expensive if this tax is passed.

I don’t know about you, but buying new clothes for my rapidly growing kids is already expensive enough.

This is also effectively a regressive tax, or one that impacts low-income families more than middle and high-income ones, because low-income families tend to spend a higher percentage of their paycheck on necessities.

Now, I don’t think House Speaker Paul Ryan has it out for the poor or minorities—I happen to think he’s a really well meaning guy—but making consumer goods more expensive is not the way to gain ground on a tax cut.

I very much agree that taxes should be cut, particularly for those with middle and low-incomes, but raising taxes on those same people to pay for it makes absolutely no sense.

If House Republicans want to find wiggle room to cut taxes without driving up the deficit, there are hundreds of federal programs and tax carve outs for the ultra-wealthy they can look into to makeup the difference.

Capping the mortgage interest deduction on mortgages over $500,000 is estimated to save taxpayers $379 billion over ten years, and reforms to entitlement programs, as well as corporate welfare programs could save hundreds of billions more.

Another option is to find savings in the federal budget by cutting waste and fraud, or leaving more responsibilities to the states.

On both the left and right we all agree that America needs tax reform, and we need it as soon as possible. But paying for corporate tax cuts by making consumer goods more expensive for low and middle-income families is definitely not an option.

Derrick Hollie is President of Reaching America, an educational non-profit organization developed to address complex social issues impacting the African American community. They work on issues related to education, energy, criminal justice reform, occupational licensing, and community relations.

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