Page 4 - ARUBA TODAY

A4 U.S. NEWS
Monday 26 June 2017
Why Republicans are struggling mightily to overhaul tax code

By STEPHEN OHLEMACHER gotiations, the White House strong incentives for U.S.-
Associated Press and congressional Repub- based companies to keep
WASHINGTON (AP) — Why licans still don’t agree on their operations in the Unit-
are Republicans struggling exactly what they want to ed States and perhaps per-
mightily to reach a consen- accomplish. suade companies to move
sus on how to overhaul the House Republican leaders overseas operations to the
nation’s tax system? are firm that they want to U.S.
The GOP is supposed to be completely overhaul the The tax, however, has
really good at cutting taxes. tax system for businesses no support in the Senate
President George W. Bush and individuals. They want because senators fear it
cut taxes. So did President to make the tax law simpler would increase the cost of
Ronald Reagan, though he and more efficient, and consumer goods.
also raised them. they want the changes to ___
Why is President Donald endure beyond the next HOW WOULD RYAN’S TAX
Trump, who has promised decade. WORK?
the largest tax cut ever, They want to cut tax rates, The border adjustment tax
having so much trouble ac- but they don’t want the is a cash-flow tax in which
complishing one of his main changes to add to the fed- House Speaker Paul Ryan of Wis., speaks during the National As- corporations could deduct
initiatives? eral government’s long- sociation of Manufacturers (NAM) 2017 Manufacturing Summit business expenses imme-
Some questions and an- term debt. That means in Washington, Tuesday, June 20, 2017. diately instead of depre-
swers about why tax over- Congress would have to Associated Press ciating them over time.
haul is hard and why Re- eliminate a lot of exemp- tax cuts. Administration of- ___ But interest on debt would
publicans have been un- tions, deductions and cred- ficials have talked about WHY NOT JUST CUT TAXES? no longer be deductible,
able to reach a consensus. its, and probably come up simplifying the tax system A growing number of Re- though current debt would
___ with a new source of rev- and getting rid of deduc- publicans say they would be grandfathered.
WHAT’S THE HOLDUP? enue. tions, but have offered few rather cut taxes than tack- A U.S. company that makes
After weeks of private ne- The White House is all about specifics. le the difficult task of over-
hauling the tax system. a product and sells it do-
House Speaker Paul Ryan mestically would pay a 20
vehemently opposes this percent tax on the profit. A
approach. U.S. company that makes
Here’s why: a product and exports it
Republicans are working would pay no taxes on the
to pass a tax plan under proceeds from the sale.
a procedure that requires Both of these companies
only a simple majority in the could deduct the cost of
Senate, preventing Demo- making their products as a
crats from blocking it. But business expense.
to use this procedure, the The tax is often described
package cannot add to as a tax on imports be-
the government’s long- cause companies that im-
term debt. port goods would also pay
That means simple tax cuts the tax, but they could not
would have to be tempo- deduct the cost of import-
rary, like the ones passed ed goods as a business ex-
under Bush. pense.
“Every expert agrees that For example, if a U.S. re-
temporary reforms will only
have a negligible impact tailer imports a product
on wages and economic from China for $5 and sells
growth,” said Ryan, R-Wis. it for $10, the retailer would
“Businesses need to have have to pay tax on the en-
confidence that we will not tire $10.
pull the rug out from under If a U.S. retailer buys a do-
them.” mestically-produced good
___ for $5 and sells it for $10, the
WHY IS RYAN PUSHING FOR retailer would only pay tax
A TAX ON IMPORTS? on the $5 profit.
Ryan is pushing a plan that Retailers that rely on im-
would increase taxes on ports hate the proposed
imports and cut taxes on tax. U.S. exporters love it.
exports. It’s called a border ___
adjustment tax. WHY NOT JUST CUT LOOP-
One reason Ryan likes it HOLES?
is because it would raise A popular idea on Capitol
enough revenue — about Hill is to cut tax rates for ev-
$1 trillion over the next de- eryone — individuals and
cade — to lower the cor- corporations — and make
porate tax rate from 35 up the lost revenue by
percent to 20 percent with- eliminating special-interest
out adding to the govern- loopholes.
ment’s debt. The numbers, however,
The tax would provide don’t add up.