As the border adjusted tax (BAT) is no longer on the table as part of tax reform, and given that it was planned to be a major revenue generator, the question now surrounds the expected effect on tax cuts.
In light of reduced revenue in the absence of the BAT, will the outcome be a higher than hoped for corporate tax rate, of say 27%, to ensure the cuts are permanent, or will lower rates be targeted to create a deficit and thus result in temporary tax cuts?
Republican leaders billed their decision to abandon a controversial plan to tax companies’ domestic sales and imports as an essential step toward uniting their efforts to overhaul the U.S. tax code—but its death adds new complications to an already intricate task. Though the so-called border-adjusted tax had circled the drain for months, its last gasp on July 27 greatly increased the chances that any tax cuts Congress delivers will be shallower than President Donald Trump and other GOP leaders want, or shorter-lived, experts said. Without the proposal's estimated $1 trillion in new revenue, a resulting bill may look more like the temporary tax cuts of 2001 than the once-in-a-generation overhaul of 1986 on which Trump and lawmakers have set their sights.
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