Republicans just broke one of their main rallying points that they have touted to lower class Americans in order to get their votes. Although most can rest assured that tax breaks for the rich are coming and that Obamacare is soon to be repealed, they have snuck in a little legislation that most people have not even heard of, nor understand.
A new exorbitant tax known as the “border adjustability tax” has just been introduced that Republican lawmakers are ready to pass at a moment’s notice, according to a report by Forbes. Now if you are reading this and thinking that a border adjustability tax will not affect you because you do not travel outside of the United States, then just consider what comes into the United States for you to use and consume.
The new Republican congress is preparing to pass the tax that will essentially be forced down the throats of consumers all across the country, just not in a direct form. This tax actually falls on companies who import goods to sell to the public, which actually makes up a large majority of the entire United States consumer market.
— NACD (@NACD_RD) January 11, 2017
For those of you who have ever bought a product that says “Made in China” or “Made in Mexico,” or any other foreign land, then you will be feeling the heat of what comes next with the Republican congress border adjustability tax. But the biggest area that you will feel the heat is at the gas pump. A large majority of the United States consumer market relies very heavily on foreign oil.
So first, let’s just take a look at what the new Republican tax does. Companies that buy goods and import them into the United States essentially have to pay taxes on the profits they make from those goods. So if a certain company buys red hats that are made in China for $8 and turns around and sells those red hats to you, the consumer, for $10, then that company will have to pay taxes on its $2 of profit.
With the new republican border adjustability tax, that company can no longer write off the initial $8 that it paid for the red hats. In the past, that company would have only had to pay taxes on the $2 of profit that it made. But now, that company will have to pay taxes on the full cost of the red hats, which is $10, even though it only bought the hats for $8.
If that sounds like something that you might have been hoping for, then you may want to rethink it. Sure this cuts out the amount of taxes that a company may be dodging, but that was not exactly a loophole that they were hiding behind the curtain. Instead, that added tax will be added to the total cost that a consumer pays to purchase the hat, which could essentially drive the cost of that red hat up to $14 or $15.
So now you need to take a look at the biggest way the Republican congress is about to hit you, especially with the poor and middle class. The price of crude oil is what determines how much your gas costs you at the pump everyday. Since a gigantic share of the United States relies heavily on crude oil imports, the border adjustability tax will hit that market with extreme prejudice.
After this new Republican law passes, that essentially means that poor consumers could see the cost of gas skyrocket so much that it could drive them out of the market. As everyone knows, driving the lower class out of the market, and the workforce, is the express lane to a recession.
Historically, the only people that have ever profited off a recession are the wealthy. If this new Republican border adjustability tax passes, then that could be exactly what will happen.
The border adjustability tax proposal would be a huge new tax on families on essentials, like shoes and clothes. https://t.co/6LkSKMu4gu
— Nate Herman (@hermannate) January 11, 2017
But to add insult to injury here, the Republican border adjustability tax will also benefit companies that export products, for example refrigerators by GE or planes by Boeing. Under this new Republican legislation, the border adjustability tax will allow those export goods to go without being taxed, even if they make a profit.
[Featured Image by Mark Wilson/Getty Images]