Retailers use TV ads to fight tax policy plan

Major retailers are staunchly opposed to the border adjustment tax, a provision of House Republicans’ tax reform plan that would effectively add a levy on imported goods. After pressing their case on Capitol Hill and during a meeting with President Trump at the White House, the industry is taking the fight this week to a new front: TV airwaves.

The National Retail Federation, a trade group, is running an ad campaign that suggests to shoppers that this approach to corporate taxes would result in them seeing higher prices on store shelves. The TV clip is cheekily styled like an infomercial, with an enthusiastic spokesman sarcastically touting the benefits of the “BAT tax,” an acronym for border adjustment tax.

“You need an everything tax like the BAT tax!” the actor says. “It’ll tax your car, your food, your gas, your medicine, your clothes — you name it, BAT will tax it!”

The federation said the purpose of the ad spots is to raise awareness of this issue among shoppers. Lately, the debate about this specific aspect of tax reform has been a hot topic inside the Beltway, but it hasn’t exactly gotten everyday voters fired up.

“American consumers are being asked to foot the bill for a new $1 trillion tax giveaway for multinational companies, and this

campaign will make sure those paying for it know it,” said David French, the federation’s senior vice president for government relations, in a press release.

But look at where the federation has placed the ad on television, and you have to wonder if the group also has another audience in mind. The spot is running during the “Fox and Friends” morning program and on “Saturday Night Live.” Those are each shows that President Trump has been known to watch, and retailers have good reason to want to get their message in front of him.

Trump has spoken frequently of wanting to overhaul the federal tax code, including during his address on Tuesday evening to a joint session of Congress. But he hasn’t clearly stated whether he supports a border adjustment tax as part of such an effort. In the past, he has called a border adjustment tax “too complicated.” However, in his speech Tuesday, there were hints that he might be willing to embrace such an approach.

“We must create a level playing field for American companies and workers,” Trump said.

That language echoed what has been heard recently from key proponents of the border adjustment tax. Rep. Kevin Brady, R-Texas, has used similar wording to talk about why he thinks this is good policy; so has a coalition of major corporations that supports a border adjustment tax.

The advertising campaign offers a window into the overarching message that retailers have been hammering as they try to get Congress to walk away from this idea. Because so much of the food, apparel, electronics, toys and other goods they sell are made overseas, they worry that a border adjustment tax will slam them with higher tax bills. But that hasn’t been the framework or emphasis of their argument to the lawmakers and the public: Instead, they are trying to focus on what they believe the ripple effects will be for consumers.

Brian Cornell, CEO of Target, hit on that theme this week during remarks to reporters when he was asked about a recent visit to Washington in which he talked to lawmakers about the tax’s potential impact.

“We really want to make sure consumers aren’t waking up paying prices that are 15 or 20 or 25 percent higher than they are today,” Cornell said.

To be sure, it’s not a certainty that those kinds of price hikes would be necessary if a border adjustment tax were to be implemented. Some economists say that retailers’ tax bills would not actually skyrocket under this plan, and thus they wouldn’t have a need to raise prices the way they think they will.

The retailers’ message seems to be resonating with some members of Congress. Several Republican senators have expressed uncertainty about the border adjustment tax, including John Cornyn of Texas, who tweeted in January that there were “many unanswered questions” about the idea. Sen. David Perdue, R-Ga., a former CEO of both Reebok and Dollar General, has called a border adjustment tax regressive, saying, “it just hammers low-income and middle-income consumers. And it really doesn’t foster growth.”

If House Republicans can’t get the support of GOP senators on this provision, then it’s hard to see how their wider tax reform plan moves forward.