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Washington Spotlight: Retail Caught in the Middle – Here We Go Again


With healthcare reform appearing to be placed on the back burner – at least for now – attention in Washington, D.C. is turning to corporate tax reform. Corporate tax reform is much sticker issue and many of the political dynamics that doomed the healthcare effort seem to be falling into place in much the same way in this conversation. And that could be a real problem for retail operators.

A critical component to the Trump-Ryan tax plan is the Border Adjustment Tax (BAT) that would tax imports at a proposed rate of 20 percent while exempting exports from taxation. Proponents argue that it would re-invigorate domestic manufacturing and make our products more competitive overseas.

Critics say it would significantly raise prices on thousands of domestic goods, disproportionately hurting lower income consumers – many of whom are a critical part of the Trump electoral coalition. Generally speaking, retailers are supportive of tax reform but have major issues with the BAT as it stands today.

Conservative groups backed by the Koch Brothers as well as the Club for Growth take issue with the BAT as well, and are gearing up to fight it. The problem for President Trump and Speaker Ryan is that this is same dynamic that doomed health care reform. And this fight won’t nearly be as tough.

Once again, retailers find themselves in the middle of a Republican civil war. That is becoming familiar territory for the industry. The tax nexus issue between online and bricks and mortar retailers split the party; as did the ongoing tussle with the banks and credit card companies over interchange fees; as did immigration reform; as did health care reform.

Here we go again – this time on tax reform. Retailers just cannot seem to avoid getting caught in the squeeze. Constantly being the political football in an ongoing intra-squad scrimmage is putting our brands and business models in the public spotlight in unprecedented ways.

There was hope in the industry that the election results would be a harbinger of good things to come and companies would have political and policy opportunities to grow their businesses. But at least for now, instead of seeing green, operators are still seeing red.

Joe Kefauver is managing partner of Align Public Strategies, a full-service public affairs and creative firm that helps corporate brands, governments and nonprofits navigate the outside world and inform their internal decision-making. Align specializes in service sector industries.

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