For more than 20 years I have been an advocate for small businesses through my appointments to statewide committees with the Texas Association of Business, National Federation of Independent Business and the Texas Small Business Advisory Council. As a seven-term legislator, I’ve taken that advocacy to the Texas Capitol, having served on the Economic & Small Business Development committees and as vice chairman of both the House committees on Agriculture and Livestock and Energy Resources, as well as chairman of the Texas Legislative Rural Caucus.
Small business is the engine of our economy, yet it continually suffers from the heavy hand of government and onerous laws, regulation and taxes. Too many small businesses fail or suffer under the weight of the government when they could be focused on growing their business and creating more jobs.
Now Washington is poised to add one more bad idea that could be the nail in the coffin of many businesses and cause dramatic price hikes on consumers. To finance their tax reform plan, leaders in Washington are proposing a so-called Border Adjustment Tax which would slap a 20 percent tax on all goods imported into the United States.
This new federal tax would be the breaking point for many Texas businesses. There are very few industries today that don’t rely on imports in some fashion. Retailers rely on imported textiles and clothing while grocers rely on imported foods and other products. Manufacturers rely on imported parts and equipment. Imported chemicals and fertilizer are big costs for the farmers in Texas. Imagine what a 20 percent hike will do to their bottom line.
Retailers have already faced a decline in Texas. Many of them will be unable to weather the burden of the Border Adjustment Tax. Those who can will have difficult choices to make — like raising prices and scaling back on hiring. All of this will have an impact on Texas consumers. The ripple effect of increased prices on imports will hit their wallets on the everyday items they buy at the store. Food, clothing, medicine will all see price hikes. Gas could also see 35-cent-per-gallon increase. In all, family budgets could pay an estimated $1,700 more per year for these necessities. For some Texas rural residents, these items aren’t as easy to come by and we must drive farther to get to them, so we will be feeling disproportionate pain from the Border Adjustment Tax.
Many U.S. Senate leaders have expressed doubts about the Border Adjustment Tax, including the two who represent our state in that body. Republican Sen. John Cornyn noted that there are many unanswered questions about the proposed border adjustment tax — and that when he first heard of it, “the hair on the back of my neck started to stand up.” Sen. Ted Cruz, an original supporter of the border tax concept, now says: “There’s no doubt that one of the most controversial aspects of the House tax plan is border adjustability, and I think there are many folks in our economy who are concerned about the impact that it would have, particularly on retailers, and those arguments carry considerable weight.”
Reforming our tax code is long overdue and it will be no easy task. But I’m interested in lowering our overall tax burden rather than in increasing taxes in any area.