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A GOP tax policy that could pit Georgia farmers against the likes of Home Depot

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Do you tax goods as they head in, or on their way out? A freighter heads up river into the Port of Savannah. AJC file/Curtis Compton, ccompton@ajc.com

With an end to partisan gridlock only weeks away, the lobbying industry in Washington is about to get a big boost. More than likely, much of the cash will flow from here.

One of the first initiatives of an all-GOP federal operation could pit Georgia exporters – i.e., agribusiness – against the state’s major importers. Atlanta-based Home Depot, for instance.logo-all

The Associated Press is out this morning with an analysis of Republican plans for a major shift in the nation’s tax code:

Congressional Republicans are planning a massive overhaul of the nation’s tax system, a heavy political lift that could ultimately affect families at every income level and businesses of every size.

 

Their goal is to simplify a complicated tax code that rewards wealthy people with smart accountants, and corporations that can easily shift profits — and jobs — overseas. It won’t be easy. The last time it was done was 30 years ago.

 

Senate Majority Leader Mitch McConnell, R-Ky., and Speaker Paul Ryan, R-Wis., have vowed to pass a tax package in 2017 that would not add to the budget deficit. The Washington term is “revenue neutral.”

Details are still scarce on the Senate side. Not so on the other side of the Capitol:

House Republicans have released the outline of a tax plan that would lower the top individual income tax rate from 39.6 percent to 33 percent, and reduce the number of tax brackets from seven to three. The gist of the plan is to lower tax rates for just about everyone, and make up the lost revenue by scaling back exemptions, deductions and credits.

 

The plan, however, retains some of the most popular tax breaks, including those for paying a mortgage, going to college, making charitable contributions and having children.

 

The standard deduction would be increased, giving taxpayers less incentive to itemize their deductions.

 

The non-partisan Tax Policy Center says the plan would reduce revenues by $3 trillion over the first decade, with most of the savings going to the highest-income households.

 

That’s not revenue neutral.

 

Small business owners would get a special top tax rate of 25 percent.

 

Investment income would be taxed like wages, but investors would only have to pay taxes on half of this income.

The key part of the House Republican plan, the part that makes it fiscally viable, is what to do with profits earned outside U.S. borders:

Under current law, the United States taxes the profits of U.S.-based companies, even if the money is made overseas. However, taxes on foreign income are deferred until a company either reinvests the profits in the U.S. or distributes them to shareholders.

 

Critics say the system encourages U.S.-based corporations to invest profits overseas or, more dramatically, to shift operations and jobs abroad to avoid U.S. taxes.

 

House Republicans want to scrap America’s worldwide tax system and replace it with a tax that is based on where a firm’s products are consumed, rather than where they are produced.

 

Under the system, American companies that produce and sell their products in the U.S. would pay the new 20 percent corporate tax rate on profits from these sales. However, if a company exports a product abroad, the profits from that sale would not be taxed by the U.S.

 

There’s more: Foreign companies that import goods to the U.S. would have to pay the tax, increasing the cost of imports.

 

Exporters love the idea. But importers, including big retailers and consumer electronics firms, say it could lead to steep price increases on consumer goods.

Couched as a tax or jobs policy, this could make sense. But as trade policy, one can see in it the beginnings of a tariff war. You slap an additional tax on our goods as they come into your country, says China – a major market for Georgia farm products, and we slap an tax on your goods coming into ours.

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We told you earlier this morning about a weekend Wall Street Journal report on more than $300,000 in stock trades involving health care and medical corporations made by U.S. Rep. Tom Price, R-Roswell, over the last four years. Senate Democrats may try to use the info to slow-walk Price’s nomination as secretary of health and human services in a Trump administration.

Not going to happen, says Charlie Harper at Georgiapol.com:

The simple fact is that the stock transactions were perfectly legal, properly disclosed, and are in no way unique.  They represent a small portion of Congressman Price’s net worth.  One of the stocks highlighted that he made the most profit on isn’t a U.S’ company nor does it have U.S. operations or sales, so it is completely removed from Price’s congressional oversight.  And the nature of the hyper-critical, hyper-partisan criticism is hyper-hypocritical.

***

Changes are coming to the White House press corps in the wake of a Donald Trump presidency, the New York Times reports this morning, relying in part on a conversation with former Republican press operative Ari Fleischer:

Mr. Fleischer also recommended taking the briefings off live television. But given Mr. Trump’s propensity for showmanship, the live broadcasts may be the tradition least likely to change.

 

“There’s a piece of me that thinks what Trump wants to do more than anything else,” Mr. Fleischer said, “is make the briefing a red-hot TV show.”


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