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Border Tax Equity Act To Level Playing Field For US Exporters

by Leroy Baker, Tax-News.com, Washington

11 June 2007


A bipartisan group of US lawmakers have introduced new legislation into the House of Representatives which aims to ensure that foreign goods entering America are subjected to the same degree of taxation imposed on US goods entering other countries.

The Border Tax Equity Act would negate the estimated $379 billion disadvantage to US producers and service providers caused by foreign border-adjusted taxes, including value-added (VAT) taxes, by directing the United States Trade Representative to negotiate a remedy for the VAT inequity on goods and services within the World Trade Organization by January 1, 2009.

“I strongly support fair trade, but it needs to be on a level playing field," announced Walter B. Jones (R-NC), one of the lawmakers who introduced the bill. He added: "Differential treatment of direct and indirect taxes under international trade rules puts US producers at a profound disadvantage."

Jones went on to explain that because the US relies primarily on direct taxes rather than indirect taxes – like a VAT tax – US exports are taxed twice, while exports of countries that use VAT taxes are traded free of certain taxes.

“The result of this tilted playing field has been a record US trade deficit of $836 billion in 2006, and in the past six years, the loss of 3.2 million manufacturing jobs across the US and 200,000 in my state of North Carolina alone,” Jones said. “Our trade negotiators need to begin serving the best interest of this country by demanding a level playing field.”

Congressman Duncan Hunter (R-CA), another supporter of the bill, added: “It is time for our nation’s trade policies to begin reflecting the interests of American workers and manufacturers. This legislation, which ends the double taxation of American exports, takes a much needed step towards achieving a trading system that is fair and gives our workers and manufacturers a chance to succeed.”

The other lawmakers supporting the bill include Rep. Bill Pascrell (D-NJ) and Mike Michaud (D-ME). The legislation also has the backing of industry and trade groups, including the US Business and Industry Council (USBIC), the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and the American Manufacturing Trade Action Coalition (AMTAC).


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