The idea of a border-adjusted tax just ran into trouble in the Senate

GOP Sen. Perdue urges rejection of border tax

A critical provision of the House Republicans' tax plan is facing more resistance in the GOP-controlled Senate.

Sen. David Perdue, R-Ga., urged his colleagues Wednesday to reject the so-called border adjustment tax. The proposal would put a 20 percent tax on imports into the U.S. while making exports tax-free. Under the House plan, it would coincide with slashing the corporate tax rate from the current 35 percent to 20 percent.

Perdue argued in a letter that the tax is "regressive, hammers consumers and shuts down economic growth."

The Congressman previously served as the CEO of Dollar General, a company that imports heavily. U.S.-based retailers, which are largely in the business of importing goods made in Asia and selling them to Americans, have been outspoken in their opposition to the border-adjusted tax.

More expensive imports could mean higher prices for consumers, but some economists have argued that effect could be offset by a stronger dollar, which makes those imports less expensive than they would be otherwise.

"For sure, the tax code needs substantive change, but when Congress combines good ideas with bad ideas into a single sweeping bill, the bad ideas become law. This proposed border adjustment tax is a bad idea and should not become a permanent part of our tax code," Perdue wrote.

Disagreement over the border-adjustment tax poses one possible roadblock to House Republicans as they attempt to pass tax reform later this year.

Other Republican senators including Mike Lee of Utah and John Cornyn of Texas have also expressed skepticism about the border-adjustment tax.

The White House has appeared to warm to the idea somewhat, floating a 20 percent tax on Mexican imports as a possible method to pay for a border wall on the U.S.-Mexico border that could cost $15 billion or more.

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