New threat to outdoor businesses? How the Border Adjustment Tax could dramatically impact your tax bill.
The centerpiece of the House Republican comprehensive tax reform plan is to cut the corporate rate to 20 percent. Good news, right? Well, it depends. Trade policy advisor Rich Harper breaks it down.
Republicans now control the House, Senate and White House, so tax reform has become a hot topic. Reform means cuts, right? Not necessarily. Under the Republicans’ plan, many outdoor companies could see massive increases to their tax bills, leading to higher retail prices on outdoor apparel, footwear and equipment.
Under the border adjustment tax, the company will no longer be able to deduct the cost of the imported good. So, the lower 20 percent rate would apply to a much higher taxable income of $95 for a tax bill of $19—almost quadruple the company’s profit. These higher costs will almost certainly be passed on to the retailer and then to the consumer and could put some OIA member companies out of business entirely.