LANSING – Michigan’s largely industrial economy could be the one most dramatically harmed by a so-called border adjustment tax that has been discussed in Washington, D.C., a report by the organization Americans for Prosperity has said.
A border adjustment tax has been discussed as part of a major tax restructuring by President Donald Trump and Congress. The tax, which has not yet been actually introduced in Congress, would impose a fee on products imported into the United States. It is seen by some as a way of minimizing a large increase in the federal budget deficit if a tax cut proposal is enacted.
But the so-called BAT has been opposed by a number of conservative organizations, such as AFP, as well as organizations representing businesses that rely on imported goods. The Michigan Retailers Association recently announced its opposition to any proposal for a border adjustment tax.
According to the AFP report, states whose economies are more dependent on international trade are more likely to be affected, and affected negatively, by a BAT.
In terms of sheer dollar value, California has the most imports into its economy at more than $400 billion. That represents some 17.16 percent of its total gross domestic product, which would make California the 10th most affected state by a proposed BAT.
But Michigan would see more than 27.4 percent of its gross domestic product affected by such a tax, the AFP said, meaning it would be the state most drastically affected and potentially harmed by a BAT. The report said import values into Michigan total $122.7 billion. The state’s gross domestic product is estimated at nearly $448 billion.
Because the state’s manufacturing industry, especially automotive manufacturing, relies on parts and other products made overseas, the BAT could add a heavy tax load to those goods.
Louisiana would have the second highest affect, followed by Tennessee, New Jersey, Kentucky, South Carolina, Illinois, Texas, Georgia and then California.
South Dakota would be the least affected state, the report said, but all states would see some impact from a tax if in fact it was enacted.
AFP-Michigan Director Pete Lund said the nation has a chance to see meaningful tax changes, but that a BAT would mean Michigan would send a higher percentage of money to Washington.
It would be, Lund said, “a crushing financial blow that will hurt job growth and limit opportunity.
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