Proposed tax on imports would increase prices on food, clothing goods, businesses warn
COLUMBIA, SC (WIS) - A proposed new federal tax plan going through Congress right now could put a strain on your wallet- taxing everyday items like food, clothes and more.
If passed, the Border Adjustment Tax could cause higher prices on all imported goods.
In the State House on Thursday, local business owners spoke up, opposing the plan. Small business owners are afraid they would feel the effects of this tax the most because when prices rise, consumer demand falls.
Most of the furniture at Columbia businesswoman Eva Bradley's store, Carolina Imports, is imported from other countries.
"We do look for domestic sources as well, there are just not that many, and when we do find them, the prices are three times what people are used to paying," Eva Bradley says.
She worries over the fate of her store if the new tax on all imports to the United States, known as the Border Adjustment Tax, is passed in Washington.
The plan has support from House Representatives, like Speaker Paul Ryan.
"This is not a big business. This is a small, little business. Our tax liability would quadruple," Bradley said.
Retail lobbyists are pushing against the tax as well.
"Businesses will significantly have to downsize. They'll probably have to lay off some employees. And they could even have to close their front doors- smaller businesses would," Lisa McGill Sweatman, with the South Carolina Retail Association, said.
Economists say there would be benefits, like federal dollars raised.
"If you raise taxes on imports, decrease taxes on exports, you're going to raise some money. So, the hope is that this would raise they're saying about a trillion dollars over 10 years. And they would use that money to offset corporate income taxes to reduce tax burdens on businesses," USC Economics Professor William Hauk says.
But there are drawbacks.
"Now, it looks like you've imposed a regressive tax that raises prices on goods that middle and working class families consume, in order to cut corporate income taxes," Hauk says.
Bradley says she may have to shut her business' doors if the tax comes true.
"A portion of this tax would have to be passed on to our customers in order for us to remain in business. Basic economic theory tells us that when prices rise, demand falls," she says.
Senator Lindsey Graham has implied the plan is unlikely to pass the Senate.
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