Border Crosser

by Ramesh Ponnuru

The office of Senator David Perdue (R., Ga.) sent out a press release yesterday noting his continued support for the FairTax, a national sales tax that would replace today’s income, sales, and corporate-income taxes. (The release included this link to a short video of him talking about it on the Senate floor.)

Perdue has in recent days gotten more coverage for emerging as a leading opponent of the House Republicans’ idea of a 20 percent corporate tax rate with a “border adjustment” so that it applies to imports but not exports. In an op-ed, he writes, “This 20 percent tax on all imports is regressive, hammers consumers, shuts down economic growth, and is proven to grow the federal government.”

He adds, “A University of Maryland study estimates that some industries could face employment declines of up to 20 percent.

“Why would we do this at a time when millions of Americans are struggling to get from payday to payday?”

These positions — against border adjustment, for the FairTax — don’t go well together, because the FairTax is border-adjusted too. Go to FairTax.org/faq, and the first words you’ll find under “How does this affect U.S. competitiveness in foreign trade?” are “Because the FairTax is automatically border adjustable . . . ”

The FairTax would be a larger tax on imports than the one to which Senator Perdue objects. FairTax advocates generally call for a 23 percent sales-tax rate, and Senator Perdue has co-sponsored a bill with that rate. That’s higher than the 20 percent tax Senator Perdue’s op-ed opposes.

My point here is not to play gotcha. It’s just to say that these issues are complicated and have to be carefully thought through. Senator Perdue has a lot of company in getting some of them mixed up.

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