America needs comprehensive tax reform to unleash innovation and help small businesses and families, and Congress is assessing proposals to achieve that goal. Unfortunately, congressional leadership insists that any tax reform bill include a Border Adjustment Tax (BAT), which will add a 20 percent tax on all imports coming into the U.S., while excluding exports. This is essentially a national sales tax on all consumers – in North Carolina and across the nation.
This tax would be especially devastating for our state, as many of our businesses rely on imports to manufacture products or resell goods. In 2016 alone, North Carolina imported goods worth over $47 billion, contributing to our state’s burgeoning manufacturing and retail industries. In fact, retail is North Carolina’s largest private employer. It is also the sector that would be hurt the most by a BAT.
According to the National Retail Federation, more than 60 retail brands have headquarters or distribution centers across the state, and 30 of North Carolina’s top employers are retailers. North Carolinians shop at these retailers – including Family Dollar, Food Lion, Ashworth’s Clothing, and Kimbrell’s Furniture – every day.
By paying a 20 percent tax on imported goods, North Carolina businesses would be forced to shift those costs onto consumers, raising the price of consumer goods such as clothing and food. The National Retail Federation estimates that consumer prices will rise an estimated 15 percent. Even though agriculture is North Carolina’s leading industry, generating more than $90 billion annually, if the BAT is implemented, consumers could see cost increases during their next trip to Food Lion on fresh produce and other items. The National Grocers Association noted that “as much as 30 percent to 40 percent of fresh produce items sold in stores are imported into the United States at some point throughout the year. Instituting a ‘food tax’ on consumers for imported products is simply not a workable solution.”
Businesses that currently thrive would lose customers or could cut jobs to offset profit losses and increased costs. Why should a tax reform policy hurt consumers and cost jobs? Why punish successful businesses and hard-working families?
Proponents argue that a BAT will revitalize American manufacturing, creating jobs while generating revenue for the federal government. What they neglect to mention is that this revenue is created on the backs of American businesses and families, in an effort to raise one trillion dollars for policymakers’ other projects. North Carolina depends on the hard-working individuals who have founded and grown innovative businesses. To preserve this successful legacy and protect our state’s economy, our policymakers should reject any tax reform proposal that includes a Border Adjustment Tax, and instead focus on reducing federal spending and lowering corporate and individual tax rates.
Our leaders should remove obstacles for businesses and reward success, not punish it. This is a once in a generation moment, and the people of North Carolina are looking to our representatives to ensure any tax reform proposal meets that standard.
Tarte, a Republican from Cornelius, represents District 41 in the N.C. Senate.