A conservative advocacy group founded by billionaire brothers Charles and David Koch is directly confronting a traditional ally -- House Speaker Paul Ryan -- as it mobilizes a new national effort to derail a proposed tax on U.S. companies’ domestic sales and imports.
Americans For Prosperity, which advocates lower taxes and smaller government, plans to focus its efforts most heavily on about 15 states where it believes it can best rally opposition and put members of Congress on notice, the group’s leadership said Thursday.
“There are moments where you kind of have a disagreement on issues and you shrug your shoulders and you move on,” AFP President Tim Phillips told reporters on a conference call. “But this border-adjustment tax is no such issue.”
The Koch brothers have a long history of supporting Republicans. But the border adjustments -- part of a tax overhaul agenda backed by Ryan and House Ways and Means Committee Chairman Kevin Brady -- is driving a wedge between the conservative donors and some of their staunchest political allies. AFP says the tax would mean higher costs for retailers and other industries that rely on imports -- costs that would be passed along to consumers.
Ryan, referring to the border-adjusted tax during a press conference earlier Thursday, said, “I would say to those who are concerned about this, I think they under-appreciate how much better our tax system will be with this kind of provision.”
Tax Reform
Ryan’s plan calls for replacing the existing corporate income tax of 35 percent with a 20 percent tax on companies’ domestic sales and imports. Exports would be excluded from taxation. The plan, which has been estimated to raise more than $1 trillion over a decade, represents a centerpiece of the House GOP plan to overhaul business and individual taxes. Without its revenue contribution, meaningful rate cuts would become harder to achieve.
The plan would make U.S. companies more competitive globally, said Ryan, noting that many other nations already have border-adjustments in their tax codes. That helps their exports avoid double taxation, while U.S. exports don’t, he said.
“Do you know why tax reform is going to happen? Because it has to happen,” Ryan said. “America has the worst tax code in the industrialized world -- it is killing economic growth, it is driving companies to become foreign companies.”
AFP’s plans for working against Ryan’s proposed tax call for getting supporters to make phone calls and visit the home offices of members of Congress, with extra attention given to members of the House Ways and Means Committee and the Senate Finance Committee. A digital ad is being rolled out and Phillips said the group is “considering other moves as well.”