HB 24-12: Implementing a Border Adjustment Tax Act (Final Vote)
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  HB 24-12: Implementing a Border Adjustment Tax Act (Final Vote)
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Author Topic: HB 24-12: Implementing a Border Adjustment Tax Act (Final Vote)  (Read 1048 times)
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« on: May 27, 2020, 09:57:47 AM »
« edited: July 02, 2020, 09:58:11 AM by Speaker Thumb21 »

Quote
Implementing a Border Adjustment Tax Act

An Act to implement an Border Adjustment Tax

Be it enacted by the Congress of the Republic of Atlasia assembled:

Quote
Section 1: BAT Rate

- A Border Adjustment Tax of 15% shall be implemented

Section 2: Tax Credit for Certain Types of Business Owners

- Owners of Sole Prioportships, Partnerships, and LLC's will receive a $1000 Dollar Tax Credit

- Tax credit will begin to phase our for businesses making $300,000 or more and will fully phase-out for businesses making over $500,000

Sponsor: Old School Republican
House Designation: HR 24-12

72 hours to debate.
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« Reply #1 on: May 28, 2020, 10:00:21 AM »

This seems like a more reasonable proposal. Do we have a rough idea of how much the BAT would generate?
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« Reply #2 on: May 28, 2020, 03:30:58 PM »

This seems like a more reasonable proposal. Do we have a rough idea of how much the BAT would generate?

https://taxfoundation.org/faqs-border-adjustment/

Quote
The Tax Foundation estimates that, in the context of the House GOP tax plan, the border adjustment would raise $1.1 trillion over 10 years, and would do minimal economic harm


Though this proposal would have had the BAT be 20% not 15%
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PPT Spiral
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« Reply #3 on: May 29, 2020, 02:32:33 AM »

The nature of a border-adjustment tax incentivizes companies to keep their assets domestically, which can result in some valuable tax revenue given all of the latest spending.

I propose the following amendment:

Quote
Implementing a Border Adjustment Tax Act

An Act to implement an Border Adjustment Tax

Be it enacted by the Congress of the Republic of Atlasia assembled:

Quote
Section 1: BAT Rate

- A Border Adjustment Tax of 20% shall be implemented

Section 2: Tax Credit for Certain Types of Business Owners

- Owners of Sole Proprietorships, Partnerships, and LLC's will receive a $1000 Dollar Tax Credit

- Tax credits will begin to phase out for businesses making $300,000 or more, decreasing by $50 for each additional $10,000 increment of income, and will fully phase out for businesses making over $500,000
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« Reply #4 on: May 30, 2020, 09:50:10 AM »

Amendment is adopted
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« Reply #5 on: May 31, 2020, 07:27:34 PM »

What does this bill change?
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Fmr. Representative Encke
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« Reply #6 on: May 31, 2020, 08:11:10 PM »
« Edited: May 31, 2020, 08:56:36 PM by Representative Encke »

Sorry for my delay in posting here, but I think this bill needs to be more specific; it was the same issue with your other bill where you referred to a specific loophole without explaining the actual changes being made to the tax code. As far as I'm aware, there is no definition of 'border adjustment tax' in the current tax code, so the term needs to be clearly defined in the bill.

Edit: The FAQ that you posted also made reference to the 'design' of a border adjustment tax ("Another potential drawback of the border adjustment is that if it is not carefully designed, it may end up disadvantaging certain exporters, who would not receive a full tax rebate on their exports, but would still be hurt by the stronger dollar.") which makes me think that there are more specific considerations that need to be made when trying to enact such a tax.
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Fmr. Representative Encke
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« Reply #7 on: June 16, 2020, 06:35:17 PM »

OSR?
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Computer89
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« Reply #8 on: June 18, 2020, 03:27:32 PM »


Does any one have an amendment, I haven’t called a final vote cause I thought you had an amendment
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Fmr. Representative Encke
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« Reply #9 on: June 18, 2020, 04:21:14 PM »


Does any one have an amendment, I haven’t called a final vote cause I thought you had an amendment

I'm simply arguing that the bill requires a bit more beyond what you have currently, which is 'A Border Adjustment Tax of 20% shall be implemented,' without an actual definition or explanation. I figured you were the best person to address this issue in an amendment because you're the one who's advocating for a BAT in the first place.

The other thing is that I'm not sure what your intention is here. Is the aim to follow the GOP's suggestion for lowering the corporate income tax rate to 20% and giving it a 'border adjustment'? Or is this 20% an additional tax that is also border-adjusted? The bill doesn't make this very clear.
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« Reply #10 on: June 30, 2020, 10:41:44 PM »

I motion for a final vote on this legislation.
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« Reply #11 on: July 01, 2020, 01:37:26 AM »

no objections
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« Reply #12 on: July 01, 2020, 11:34:41 AM »
« Edited: July 01, 2020, 11:37:58 AM by Speaker Thumb21 »

I'm happy with moving to a final vote personally, and I'll be voting in favour - but I'd be interested to hear what the sponsor thinks of Encke's concerns? My assumption is that this additional tax which is border adjusted and if thats the case, I think the bill is clear enough. Of course, I wouldn't vote for it if it came with a slashing of corporate taxes as was in the IRL Republican proposal for reasons I've more or less made clear in other tax related debates.
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« Reply #13 on: July 01, 2020, 12:58:08 PM »

I'm happy with moving to a final vote personally, and I'll be voting in favour - but I'd be interested to hear what the sponsor thinks of Encke's concerns? My assumption is that this additional tax which is border adjusted and if thats the case, I think the bill is clear enough. Of course, I wouldn't vote for it if it came with a slashing of corporate taxes as was in the IRL Republican proposal for reasons I've more or less made clear in other tax related debates.


I said it wouldn’t slash the corporate tax rate
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« Reply #14 on: July 02, 2020, 09:57:57 AM »

Final Vote

72 hours
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« Reply #15 on: July 02, 2020, 10:24:46 AM »

Aye
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« Reply #16 on: July 02, 2020, 10:27:48 AM »

Aye
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cinyc
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« Reply #17 on: July 02, 2020, 12:31:22 PM »

Abstaining. Let my successor vote in my place.
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Elcaspar
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« Reply #18 on: July 02, 2020, 03:18:33 PM »

Aye
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« Reply #19 on: July 02, 2020, 03:42:36 PM »

Aye
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Fmr. Representative Encke
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« Reply #20 on: July 04, 2020, 04:17:24 PM »

Abstain


I'm happy with moving to a final vote personally, and I'll be voting in favour - but I'd be interested to hear what the sponsor thinks of Encke's concerns? My assumption is that this additional tax which is border adjusted and if thats the case, I think the bill is clear enough. Of course, I wouldn't vote for it if it came with a slashing of corporate taxes as was in the IRL Republican proposal for reasons I've more or less made clear in other tax related debates.


I said it wouldn’t slash the corporate tax rate

Had a brief conversation over Discord about this with OSR; I understand that this is a separate tax that is border adjusted and that this isn't following the GOP's tax plan, but am wondering why OSR cited this item earlier in the debate:

Quote
The Tax Foundation estimates that, in the context of the House GOP tax plan, the border adjustment would raise $1.1 trillion over 10 years, and would do minimal economic harm

The 'border adjustment' discussed in this source refers to the border-adjusting of the current corporate income tax as part of a broader plan to make the U.S. tax system completely destination-based, which is completely different from adding an extra 20% border-adjusted tax on top of the current corporate tax, which is what this bill seems to be doing (correct me if I'm completely misunderstanding everything here).
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SevenEleven
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« Reply #21 on: July 04, 2020, 04:25:57 PM »

Nay
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Computer89
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« Reply #22 on: July 04, 2020, 05:17:42 PM »

Abstain


I'm happy with moving to a final vote personally, and I'll be voting in favour - but I'd be interested to hear what the sponsor thinks of Encke's concerns? My assumption is that this additional tax which is border adjusted and if thats the case, I think the bill is clear enough. Of course, I wouldn't vote for it if it came with a slashing of corporate taxes as was in the IRL Republican proposal for reasons I've more or less made clear in other tax related debates.


I said it wouldn’t slash the corporate tax rate

Had a brief conversation over Discord about this with OSR; I understand that this is a separate tax that is border adjusted and that this isn't following the GOP's tax plan, but am wondering why OSR cited this item earlier in the debate:

Quote
The Tax Foundation estimates that, in the context of the House GOP tax plan, the border adjustment would raise $1.1 trillion over 10 years, and would do minimal economic harm

The 'border adjustment' discussed in this source refers to the border-adjusting of the current corporate income tax as part of a broader plan to make the U.S. tax system completely destination-based, which is completely different from adding an extra 20% border-adjusted tax on top of the current corporate tax, which is what this bill seems to be doing (correct me if I'm completely misunderstanding everything here).



What that quoted is how much the BAT would bring in revenue not how much the total tax reform proposal would bring .


If the BAT was implemented along with the 2017 tax reform the net cost would be 400 billion instead of 1.5 trillion over 10 years
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Mike Thick
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« Reply #23 on: July 04, 2020, 06:51:16 PM »

Aye.
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Fmr. Representative Encke
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« Reply #24 on: July 04, 2020, 07:09:33 PM »

Abstain


I'm happy with moving to a final vote personally, and I'll be voting in favour - but I'd be interested to hear what the sponsor thinks of Encke's concerns? My assumption is that this additional tax which is border adjusted and if thats the case, I think the bill is clear enough. Of course, I wouldn't vote for it if it came with a slashing of corporate taxes as was in the IRL Republican proposal for reasons I've more or less made clear in other tax related debates.


I said it wouldn’t slash the corporate tax rate

Had a brief conversation over Discord about this with OSR; I understand that this is a separate tax that is border adjusted and that this isn't following the GOP's tax plan, but am wondering why OSR cited this item earlier in the debate:

Quote
The Tax Foundation estimates that, in the context of the House GOP tax plan, the border adjustment would raise $1.1 trillion over 10 years, and would do minimal economic harm

The 'border adjustment' discussed in this source refers to the border-adjusting of the current corporate income tax as part of a broader plan to make the U.S. tax system completely destination-based, which is completely different from adding an extra 20% border-adjusted tax on top of the current corporate tax, which is what this bill seems to be doing (correct me if I'm completely misunderstanding everything here).



What that quoted is how much the BAT would bring in revenue not how much the total tax reform proposal would bring .


If the BAT was implemented along with the 2017 tax reform the net cost would be 400 billion instead of 1.5 trillion over 10 years

Yes, and if the source you provided is correct, the BAT being referred to is a border adjustment to an existing tax, the corporate income tax. It isn't a completely new tax being applied on top of the existing corporate income tax.

From the source you provided:

Quote
What is a border adjustment?
The border adjustment is a way of modifying the current U.S. income tax. Right now, the income tax applies to businesses’ income from production in the United States. Under a border adjustment, the income tax would apply to businesses’ income from sales in the United States.

How would a border adjustment work?
Right now, if a company makes a product in the United States and sells the product overseas, it is required to pay income taxes to the U.S. on the income from the sale. But under a border adjustment, companies would no longer be required to pay income taxes to the U.S. on their income from exports – because the products are not sold in the United States.

On the flip side, under the current tax code, if a company sells a product in the United States that was produced overseas, it doesn’t pay income taxes to the U.S. on the value of the imported product. But under a border adjustment, companies would be required to pay income taxes to the U.S. on the value of their imports – because the products are sold in the United States.

In total, under a border adjustment, the income tax would apply to goods produced and sold in the United States and goods produced in foreign countries and sold in the United States.
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