An attempt to tax foreigners and subsidize Americans would lead to backlash and retaliation overseas. In any case, competitive international markets would undermine the purpose of the BAT.
Dallas, Texas (PRWEB) April 24, 2017
The BAT, which would impose a 20 percent tax on imported goods and exempt exported goods, has been given some serious consideration by both policymakers and economists. But there are too many variables in the international market to expect that it will produce the desired results in terms of more domestic production and tax revenue, says Ranson. For example:
- While a tax would cause Americans to substitute cheaper domestic goods for foreign goods, it would also reduce their total spending.
- Furthermore, the tax burden would fall on consumers, producers and importers of goods, not on foreign exporters.
- The assumption that the dollar would appreciate automatically in response to the tax, thus reducing the cost of imports, is theoretical, and has no historical precedence.
"It is a good idea to cut and simplify the corporate income tax. But an attempt to tax foreigners and subsidize Americans would lead to backlash and retaliation overseas. In any case, competitive international markets would undermine the purpose of the BAT," says Ranson.
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