THE TTALK QUOTES
On Global Trade & Investment
Published Three Times a Week By:
The Global Business Dialogue, Inc.
Washington, DC   Tel: 202-463-5074
Email: Comments@gbdinc.org
No. 18 of 2017
TUESDAY, APRIL 4, 2017
Filed from Portland, Oregon

Click  here for the March 20 quote on border taxes from Robert Lighthizer.

OF TAXES, TRADE, AND COLLIDING DISCIPLINES

"The number of trade geeks masquerading as tax geeks in this city [Washington, DC] has reached epic proportions -- trade folks surging across the line that has traditionally separated our practice fields."

John R. Magnus
March 29, 2017

CONTEXT
John Magnus is the president of TradeWins LLC, a member of the Global Business Dialogue's Board of Advisers, and an especially astute observer of American trade policy.   Last Wednesday, March 29, he served as the moderator for the GBD colloquium on Border Taxes, the Background, A Proposal, and The Challenges.

Congress, or, more specifically, the House Committee on Ways and Means, set the stage for this event with its blueprint for a new American tax code that includes a Destination-Based Cash Flow Tax, which is adjustable at the border. Here is a bit more of what Mr. Magnus said in framing the issue:

MR. MAGNUS
I suspect that if the tax bar could file a safeguard case they probably would, in order to deal with that surge of injurious imports [from trade lawyers].

There are good reasons for this of course; I don't think we are going to kill each other. The question is, during our collaboration, what kind of policies will we produce? The stakes are sort of high, the world's watching.

Moving off of net income as the basis for taxing business feels momentous in some way, maybe not like moving off the gold standard, but I'm sure that it's prompted as much email traffic, [as] some of you may have experienced.

Border adjustment, depending on whom you ask, is either an abomination or maybe it's a regrettable necessity because it broadens the tax base and allows rates to be brought down without damaging fiscal consequences; or, it's affirmatively desirable in its own right and like virtue, its own reward.

Either it's a flagrant violation of trade obligations, or else it's the correct and legitimate way to do what we too clumsily tried to do with DISC and FSC and ETI. ...

On the terminology, you know, is the blueprint proposing a border adjustment tax or is it proposing the border adjustment of a tax? ...

Which of those policy arguments [making the rounds from inbox to inbox] are relevant to any destination-based tax, and which of them apply very specifically to the one that has been proposed in the blueprint - the "Destination-Based Cash Flow Tax?" And how are we supposed to understand the competing claims about ... the situation today in regard to the burden of non-border adjusted taxes faced by U.S. companies and by their foreign rivals?

COMMENT
We have nothing to add to Mr. Magnus's introductory remarks from last week. We do highly recommend, however, that the reader listen to them in their entirety and indeed to all of the panel presentations. They are all now readily available from the welcome page of the GBD website, www.gbdinc.org.
We would note, with apology and regret, that there haven't been many TTALK Quotes these last couple of weeks. There are reasons for that, but it certainly has not been because of any lack of material. From Brexit to China and from trade deficits to taxes, the trade policy river is overflowing its banks. We'll do our best to take note of some of those developments in the days ahead, beginning with the expert commentary GBD has benefitted from on border taxes and including the unfolding drama of Brexit.
SOURCES & LINKS
The Last Event is a link to the welcome page of the GBD website, which now includes materials from GBD's March 29 colloquium on Border Taxes. These include:

Morris, Magnus, and Merrill is the MP3 recording with the March 29 introductory comments from R. K. Morris and John Magnus and including the opening presentation from Peter Merrill of PricewaterhouseCoopers.

Ken Kies is a link to the presentation given by Ken Kies of the Federal Policy Group at GBD's March 29 colloquium.

Porges & Conclusion takes you to the MP3 recording with the remarks from Amelia Porges of Porges Law, which focused on the challenges the United States seems likely to face in the World Trade Organization in the event that the Ways and Means blueprint becomes law.

Addition Materials to Come. GBD expect to post additional materials on this topic soon. We will send out a separate note when those documents are available.




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R. K. Morris, Editor
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