For decades, Pennsylvania has remained in the bottom of state rankings for job growth, income growth and population growth. Indeed, last year, Pennsylvania lost 8,000 residents who sought out more opportunity in other states with a better tax environment. Adding a giant new consumer tax on the industries that employ workers across our Commonwealth is not a path for job growth, but that's exactly what Congress is considering as part of tax reform.
Under the Border Adjustment Tax promoted by some in Congress, a 20 percent levy would be imposed on all goods imported into the country. No industry would be spared, but a new report from Freedom Partners and Americans for Prosperity highlights some of the biggest industries that would be whacked by this policy – together they account for about 1-in-3 private jobs in America!
Manufacturing, energy, retail and agriculture–all industries that create jobs across the Commonwealth.
Manufacturing would suffer greatly from the BAT due to the supplies they need to manufacture goods here in the U.S. Manufacturers rely heavily on raw materials and parts sourced from abroad, and use imported machines, tools and computers to make products domestically.
Paying 20 percent on all of these components would increase prices substantially, while forcing many companies to cut jobs.
American automakers are a perfect example. It's estimated that the BAT could raise the price of each car made in the U.S. by more than $2,000. This in turn could lead to sluggish sales and job losses at factories and car dealerships.
It would cost more for a car under the BAT, and it would cost more to fill one up, too. A double whammy for Pennsylvania, which already has the highest gas tax in the nation. Estimates show that gas prices could increase by 30 to 40 cents per gallon as a result of the Border Adjustment Tax. Utility bills could increase for many Pennsylvanian's as well. And since low-income families spend the highest proportion of their earnings on fuel and electricity, they would be hurt the most.
Higher fuel costs also mean higher transportation costs, so for goods that need to be moved from one place to another, you can expect their costs to go up, too. Pennsylvania has seen growth in the transportation sector as logistics is a leading industry in PA, we shouldn't threaten that success.
For the retail industry, which provides one out of every eight private-sector jobs in the country, the BAT is an existential threat. This already-struggling industry relies heavily on imported goods, and, with slim profit margins, simply can't afford a giant new tax. Under the BAT, many retailers could end up having to pay significantly more in taxes than they make in profit–an impossible way to do business.
Fertilizer, chemicals and fuel — much of which is imported — comprise a significant portion of operating costs for the agriculture industry. The BAT would cause these costs to rise to a point that would jeopardize family farms while passing higher prices on to consumers.
Prepare to pay more for those bananas, avocados, tomatoes, and even beer and liquor!
Pennsylvania has one of the highest tax burdens in the country. Pennsylvania businesses pay the second highest corporate tax rate in the nation. Adding a new federal consumer tax is not the tax reform we need. PA members of Congress should reject the Border Adjustment Tax and instead work for tax reform that results in a flatter, fairer and simpler tax code that let's Pennsylvania families keep and direct more of the dollars they earn.
www.americansforprosperity.org or at email@example.com. (Portions of this commentary originally ran at www.americansforpropserity.org)