House GOP’s corporate tax plan draws doubts

WASHINGTON — House Republicans face opposition to their plan to overhaul the way corporations pay federal taxes from a powerful group of lawmakers — other Republicans.

“I’m not very enthused about it,” said Republican Sen. Orrin Hatch of Utah, chairman of the Finance Committee and the Senate’s top tax writer.

Another skeptic is John Cornyn of Texas, the No. 2 Republican in the Senate.

“The question is, who is going to pay the tax?” Cornyn asked. “Is it going to be our citizens?”

Seeking to overhaul the tax code for the first time in 30 years, the House GOP plan would scrap the 35 percent tax on corporate profits, which is riddled with exemptions, deductions and credits. It would be replaced with something called a “border adjustment tax.”

Under the system, American companies that produce and sell their products in the U.S. would pay a new 20 percent tax on the profits from these sales. However, if a company exports a product, the profits from that sale would not be taxed by the U.S.

Foreign companies that import goods to the U.S. would also pay the tax.

The proposal could help American workers and exporters who are struggling to compete against lowwage workers in other countries. However, it could also drive up prices for imported goods, including automobiles, consumer electronics, and everyday retail items.

The border adjustment tax is a key feature of House Republicans’ efforts. It provides the revenue to help pay for lower tax rates.

With control of the House, Senate and White House, Republicans believe they have an opportunity to remake the tax code to their liking.

But Republican solidarity is crucial for success. The GOP holds only a two-seat majority in the Senate, and no Democrat has signaled support for the House plan.

Also, President Donald Trump has been critical of the plan.

The proposal is championed by House Speaker Paul Ryan, R-Wis., and Rep. Kevin Brady, R-Texas, chairman of the tax-writing House Ways and Means Committee.

Brady says the proposed system would boost American manufacturers and exporters, and help U.S. companies compete abroad.

“This tax has a simple but powerful principle, which is every product and service that is consumed in the United States will have an equal business tax rate of 20 percent,” Brady said.

“That not only levels the playing field between our foreign competitors in America, it gives our made in America products a fighting chance both here and abroad and eliminates any tax incentives to move U.S. jobs or manufacturing and research overseas.”

More than 100 retailers including Wal-Mart, Target and key trade associations are launching a new coalition to fight the proposal.