Abandonment of Border Adjustment Tax may lead to Shallower, Shorter Tax Cuts
The GOP’s decision to abandon the controversial border adjustment tax (BAT) increases the chances that ensuing tax cuts will be both temporary and shallower than envisioned. Without the BAT’s estimated $1 Trillion in revenue, and with no other plan to raise significant funds, analysts estimate the lowest possible revenue-neutral rate for corporate taxes is about 27%, significantly higher than either the White House or the House Republican’s Blueprint called for. While the GOP has stressed its desire for permanent cuts, if the proposed tax bill is not revenue-neutral over the course of ten years, the tax cuts must expire after that period. The situation potentially adds support to Sen. Pat Toomey’s call to increase the current budget window up to twenty-five years.