Border Adjustment & Energy Nominees
Consider a shoe retailer that imports the shoes it sells from a manufacturer in China. It buys a pair of shoes from the manufacturer for $50 and pays $10 in shipping costs. The retailer sells the shoes for $70, earning a $10 profit. Under the current tax system, the retailer would owe 35 percent in taxes on the $10 profit, because it would get to deduct the $60 it paid in business costs acquiring the shoes. The total tax bill would be $3.50.
Under the proposed tax reform plan with a border adjustment tax, the retailer would pay a 20 percent (the proposed corporate rate) tax on the $10 profit, or $2. However, the retailer would also pay a 20 percent BAT on the $50 cost of the imported shoes, bringing the total tax bill to $12 — which is more than the retailer’s profit from the sale
.. Over on the home page, my favorite form of criticizing President Trump: pointing out how his or his team’s inattention to the details of governing — i.e., having a lot of good, qualified candidates ready to nominate for management jobs at the start of his administration — is impeding one of his own popular goals, i.e., creating jobs through energy infrastructure projects.
The Trump administration has been slow to nominate candidates to some of the 600 or so significant positions in the executive branch, including the three empty spots on the Federal Energy Regulatory Commission, which has been short of a quorum since President Obama’s appointed chairman, Norman Bay, resigned on February 3.
Here’s the sort of project that is indefinitely delayed because FERC doesn’t have enough members for a quorum to give final approval:
Enbridge Energy wants to build a new pipeline to transport Appalachian shale gas to high-demand markets in Canada and the Midwest, including Ohio, Michigan, Illinois, and Ontario. In addition to 255 miles of pipeline that is three feet in diameter, the project would involve the construction of “four new compressor stations, six new metering and regulating stations, and 17 new mainline valves in Ohio and Michigan.” Once completed, it would be capable of transporting 1.5 billion cubic feet of natural gas per day. According to a union representative, welders and journeymen on the project would make $53 per hour plus benefits. The whole project would cost $2 billion and was originally slated to be completed this autumn.
Is this Trump’s fault? Trump’s team’s fault? Maybe if everyone in the White House spent a little less time on Game of Thrones–style jockeying for power and more time focusing on how the government actually worked, we would all be better off.