“American families — your constituents — would pay more so many multinational corporations can pay even less,” Cornell told the House Ways and Means Committee.
The BAT, part of a larger tax reform plan proposed by House Republicans, is intended to support U.S. manufacturers by imposing a surcharge on imported goods, while providing a credit for exports.
Retailers generally have opposed the levy, saying it would increase their tax rate significantly, compelling them to raise prices. Americans for Affordable Products, a coalition opposing the tax, has over 400 members including Walgreens Boots Alliance Inc., Dollar General Corp. and Walmart, as well as trade groups including the National Retail Federation, Food Marketing Institute and National Association of Chain Drug Stores.
Proponents of the tax say it would boost U.S. manufacturing and create jobs. The president and CEO of agribusiness giant Archer Daniels Midland Co., Juan Luciano, testified that the levy would make American companies more competitive. Also speaking out in support of the bill was former Walmart CEO Bill Simon.
“We will see more good middle-class jobs, a robust U.S. economy and an era of growth that will be led by a new industrial revolution,” Simon told the committee.
Some proponents have contended that the tax will raise the value of the dollar, offsetting the impact on U.S. businesses and consumers. Cornell rebuffed that notion, arguing that the levy would wager “paychecks on an unproven theory.” He said the BAT would boost Target’s tax rate to 75%, and increase prices paid by consumers by 20%.
On the two days following Cornell’s testimony, NRF brought retail executives from businesses large and small to Washington to implore key administration officials and congressional leaders to drop the tax proposal. While NRF strongly supports tax reform, retailers believe the BAT is bad tax policy that would increase costs on everyday necessities such as food, gas, clothing and prescription medicines for the average family by as much as $1,700 in the first year alone.
“Executives from America’s largest private sector employer are here to urge lawmakers to say ‘yes’ to tax reform but ‘no’ to doing it on the backs of consumers through a new import tax,” said NRF president and CEO Matthew Shay. “These retailers want to tell Congress and the administration just how crucial tax reform is to spurring increased investment and creating new jobs for our workers. But they are also emphasizing that we can’t afford to hobble our consumer-driven economy in the process and need to get it right the first time.”
The NRF delegation met with more than two dozen key members of Congress as well as Treasury Secretary Steven Mnuchen, Commerce Secretary Wilbur Ross and Labor Secretary Alexander Acosta. The group included executives from BJ’s Wholesale Club Inc., Dillard Department Stores Inc., Ikea USA Inc., Levi Strauss, Pier 1 Imports and QVC Network Inc.
NRF says the BAT would also put at risk millions more retail-supported jobs than it would theoretically create for manufacturing. It could cause retailers to see tax bills three to five times their profits, threatening to drive some merchants out of business. The small retailers that make up 98% of the retail industry and provide 40% of its jobs would be at the biggest risk, says the federation.