On behalf of SIA, DLA Piper has been keeping close tabs on the Border Adjustment Tax issue in Washington, D.C. As it may impact a number of SIA members, we want to provide this brief update:
It is very early in the process and there are no concrete proposals at this point. Nevertheless, lobbying for and against the Boder Adjustment Tax (BAT) has been intense and expensive with organizations such as Koch Industries and Apple spending countless millions to make their case with effectiveness that SIA cannot match at this point.
Congress returns next week with a wealth of studies and political data relative to the BAT. Given that it has dominated the tax reform debate since January, and given how much time has been lost on the healthcare debate, Republican Leaders are under pressure to assess the political climate and make some difficult decisions. There are also growing indications that the markets are starting to price into their analysis the growing perception that tax reform will fail.
For these reasons, to be most effective, SIA will wait until House Republican Leaders make those decisions; the issues for and against the BAT have been so heavily briefed that there is little for SIA to add at this point. We are taking a conservative approach to action.
If Chairman Brady decides to move forward with it, SIA will consider how to weigh in at that point. One lesson from the healthcare debate is that tax reform will not proceed without hearings and a full vetting with members and stakeholders. Given that the legislative language for the blueprint has yet to be released, House consideration may take several months. As such, there is plenty of time for SIA to make its views known – this is definitely on the SIA radar screen.
If the Chairman and Speaker decide to proceed with a House tax reform plan with the BAT despite the political risks, SIA can weigh in on the Senate side as well, where opposition to the BAT could be fatal to it with no Democratic support and a growing number of Republican Senators voicing doubts and none so far with an unqualified endorsement.
Bottom line is that much of the debate and lobbying over the BAT so far has been academic because the Committee on Ways and Means has yet to share the specifics with stakeholders. Once that happens, the lobbing will intensify and SIA will have plenty of opportunities to voice and activate the concerns of its Members. We will provide information to SIA members in the coming weeks as developments warrant.