Photographer: David Maung/Bloomberg

Ikea, Dollar General CEOs Lobby Republicans in Tax Showdown

  • Meeting follows earlier gathering with Trump last month
  • Retailers argue that tax proposal will raise consumer prices

Retail executives are returning to Washington in their latest bid to fight the border-adjusted tax proposal, aiming to turn more Republican lawmakers against House Speaker Paul Ryan’s plan.

Four industry executives are scheduled to meet with Republicans in the House and Senate on Wednesday, including Senate Majority Whip John Cornyn of Texas and Senator Cory Gardner of Colorado. Business leaders from Ikea Group, Dollar General Corp., Petco Animal Supplies Inc. and Michaels Cos. will discuss the tax proposal, which they argue will raise prices for consumers.

“Comprehensive tax reform benefits retailers and consumers alike, but including a harmful border-adjustable tax is no way to achieve it,” said Christin Fernandez, a spokeswoman for the Retail Industry Leaders Association, which represents the companies.

The border-adjusted tax has pitted industry giants against one another, with retailers on one side and exporters on the other. The proposed overhaul would punish companies that rely on low-cost overseas suppliers to stock their shelves, part of a bid to foster more domestic manufacturing. The issue has also divided lawmakers, with Ryan and House Ways and Means Chairman Kevin Brady struggling to gain support for the concept from other Republicans.

Wednesday’s meeting is part of an almost-daily conversation between the retail industry and members of Congress and the administration, Fernandez said. A group of retail CEOs that included Target Corp. and J.C. Penney Co. met with President Donald Trump last month to discuss tax reform and specifically the border-adjustment tax.

White House

The president hasn’t said whether he supports the idea. Within the White House, there is division -- with a contingent led by top strategist Steve Bannon in favor, and National Economic Council director Gary Cohn and Treasury Secretary Steve Mnuchin opposed -- according to a senior administration official. Commerce Secretary Wilbur Ross said he hasn’t taken a position on border adjustment, despite reports to the contrary. Several Republican senators, including Senate Finance Committee Chairman Orrin Hatch of Utah, have raised doubts too and are working on alternatives.

The Americans for Affordable Products Coalition, a group opposed to the tax, has grown to include 200 companies and trade groups. Last week, the National Retail Federation, the industry’s largest trade group, launched a parody-style TV ad urging consumers to oppose the tax. It aired on “Fox & Friends” and “Saturday Night Live,” shows Trump has been known to watch.

The Ryan-backed proposal would put a levy on U.S. businesses’ domestic sales and imported goods, while exempting exports from their taxable income. The tax would be assessed at a 20 percent rate and would replace the current 35 percent corporate income tax.

“Our focus is on educating lawmakers and the public on the negative consequences of BAT, which is our top priority,” Fernandez said. “This is a bad proposal that will hurt American consumers.”

— With assistance by Matthew Townsend

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