WASHINGTON (Reuters) - An aggressive corporate lobbying effort to derail a Republican-backed border tax has forced lawmakers working on tax reform to seek alternatives, Kevin Brady, chairman of the tax-writing U.S. House Ways and Means Committee, said on Wednesday.
“To their credit, they mobilized quickly and aggressively, and yes, it had an impact,” Brady told Reuters. It was a rare instance of a lawmaker acknowledging the impact of industry in lawmaking.
The proposed border adjustment tax on U.S. companies that move jobs abroad and import products back into the U.S. market was meant to be a linchpin of a Republican tax overhaul in the House of Representatives.
Brady said leading companies that rely on imports lobbied aggressively, eroding Republican support for the border tax.
While not declaring the proposed border tax dead, Brady acknowledged being open to alternatives that would accomplish the same goals, primarily removing incentives for American companies to move operations overseas.
Retailers were united in their response.
Led by the Retail Industry Leaders Association, CEOs of Target (TGT.N) and Autozone (AZO.N) and lobbyists for auto manufacturers like Toyota (7203.T) met with members of Congress and the administration.
“I have seen no other issue bring the retail industry closer together than this one,” said Brian Dodge, spokesman for the association. “The threat to retailers was enormous and the response needed to be swift and strong.”
“We are proud of the work we have done and the impact we have had, but we are not done yet,” he said. “As long as leaders continue to defend the BAT, the threat remains and our fight continues.”
The National Retail Federation, a group that includes large and small retail business owners and also helped launch the coalition against the tax, took a group of small business owners to Washington this week to argue against the border tax.
Earlier this year they took 20 CEOs to Washington and have been running television advertisements in home districts of lawmakers they were working to persuade.
In 150 meetings with lawmakers this week, they drove home how the tax would force them to raise prices.
“Hardest hit would be low and middle-income consumers, especially those on a fixed income,” NRF Senior Vice President David French wrote to Brady in a letter on Wednesday.
The failure of Republicans to repeal Obamacare, the signature 2010 healthcare overhaul of Democratic former President Barack Obama, has many in Congress now turning their attention to tax.
Republican President Donald Trump has vowed to sign a tax overhaul into law this year.
Both political parties have voiced support for an overhaul, but expectations of progress have been tempered by their varying approaches, a lack of cooperation on healthcare, and corporate opposition to the House Republican plan.
Commenting on the border-adjustment tax, House Speaker Paul Ryan said: “I understand it’s controversial and some people don’t like it.”
Ryan told The Mike Gallagher Show syndicated radio program on Wednesday: “At the end of the day, what matters is we get tax reform that we can all agree to, and so we’re working toward that consensus ... We’re going to get there.”
Reporting by Ginger Gibson; Editing by Chris Sanders and Howard Goller