Border adjustment tax is ‘critical’ part of tax reform, chief GOP tax writer says

Key Points
  • House Ways and Means Chair Kevin Brady told CNBC that Republicans are working to address concerns about the border adjustment tax.
  • Transition, timing and design can allay those concerns in a positive way, he said.
Rep. Brady: Border adjustment tax is critical
Rep. Brady: Border adjustment tax is critical

While there may be some concern about the controversial border adjustment tax, it is still a "critical" part of the Republicans' tax reform plan, chief GOP tax writer Kevin Brady told CNBC on Thursday.

The White House has signaled it will not support a border adjustment tax as it currently stands, and Brady, the chairman of the House Ways and Means Committee, said GOP leaders are working to resolve those differences.

He also said he is listening to those who have come out against the measure, such as retailers, who believe it will raise consumer prices and hurt business.

"As we listen to their concerns, especially when does the currency adjust and how much — fair concern, in my view — what we know is transition, timing and design really can allay those concerns in a positive way," Brady said in an interview with "Closing Bell."

On Wednesday, Treasury Secretary Steven Mnuchin testified before the committee that he has been working closely with Brady.

"I've discussed that there's some concerns we have on the border adjustment tax," Mnuchin said. We're looking forward to potential changes that Chairman Brady may look at, but we're working very collaboratively and our objective is to get tax reform done."

However, Mnuchin privately told Democrats in closed-door meetings that he and the president do not support the border adjustment tax, Bloomberg reported.

Brady told CNBC, "Secretary Mnuchin, in my view, is shooting straight with me."

"It is a big change, and so we are bringing to the table with the White House and the Senate sort of how we designed this to address those valid concerns. But more importantly, we're inviting their ideas as well."

The border adjustment proposal is estimated to raise about $1 trillion in tax revenue that would help pay for lowering the corporate tax rate to 20 percent, though most estimates indicate that it would not cover all the revenue lost from a lower corporate rate.

— CNBC's Ylan Mui contributed to this report.