Without question, our tax code desperately needs to be reformed. Beyond the burden of crushing tax rates that continue to harm the middle class and small businesses, it has become a haven for special interests to sneak in loopholes and other preferential treatments. For many years, the tax code has unfairly divided taxpayers into winners and losers.
When House Republican leaders pledged to end these practices and pursue a tax reform plan that would be built on fairness and simplicity, we applauded. But then they took a very odd turn and proposed the Border Adjustment Tax (BAT), a new 20 percent tax on all goods imported into the U.S.
The effects of the BAT will be felt across every business sector—manufacturing, retail, food and beverage, energy, financial services and more. Agriculture will be among those hardest hit. While farming is largely export-oriented, many of the materials that farmers rely on are purchased from abroad. Fertilizers and chemicals make up a large share of a farmer’s costs and many of those items are imported and subject to the BAT’s 20 percent price hike.
Fuel for farming equipment is another major operating cost. Many U.S. refiners rely on imported crude from other countries for domestic supply. A BAT of 20% is likely to be passed on by increasing fuel prices. Estimates show that the BAT could result in a dramatic 35 cent per-gallon cost increase. This too will increase the costs of farming and affect both producers and consumers.
Many in the ag industry have also expressed concern about the potential for a trade war, including Samuel Allen, the chairman and CEO of John Deere, who said: “If, as a result of the adjustment tax, it has an unintended consequence of causing countries like China and Mexico to buy their ag commodities from other countries, that would be negative for U.S. farmers that do a lot of exporting to China, Canada and Mexico.”
When farm costs go up, so do family grocery budgets. Many of the foods that families shop for at the grocery store everyday simply cannot be grown or produced domestically due to climate conditions, crop seasonality or production cost and supply chain issues. In addition to food, consumers can expect price hikes on most of the affordable products that we now enjoy—clothing, medicine, consumer goods like appliancs and electronics...virtually all the items in our shopping carts. Estimates show that families could pay $1700 more per year for these basics.
Fortunately, many rural representatives in our nation’s capital are speaking out against the BAT. I am proud to stand with conservative leaders like Treasury Secretary Steve Mnuchin, Senators John Cornyn and Ted Cruz and United States Representative Roger Williams, who have all expressed serious reservations about the BAT and its negative impact to both businesses and consumers.
I have been a longtime rancher, business owner and agriculture advocate. I believe in the principals of protecting American jobs and our economy, which is why I stood behind the Republicans that are in Washington, D.C.; however, the Border Adjustment Tax is just another example of the winner/loser game that has dominated our nation’s capital for far too long. Hopefully, our leaders will wake up and reject the BAT in favor of real pro-growth tax reform that will help businesses grow, create jobs and restore our great American prosperity. Please join me in praying for wisdom for our country's leadership and may they recognize just how much agriculture matters—today, tomorrow and always.
Sid Miller is the 12th Texas Agriculture Commissioner. He is an eighth generation farmer and rancher and has devoted his life to the agriculture industry, and supporting Texas producers and the communities they call home. He is a businessman, rancher, community leader, former ag teacher and former school board member.