Target has issued a stark warning about the possible introduction of a "border adjustment tax" on U.S. imports, saying it would result in customers paying more at the register.
CEO Brian Cornell was in Washington D.C. on Tuesday to plead the Minneapolis retailer's case against the tax now being considered by Republicans. The measure would see a levy of up to 20 percent placed on goods imported into the U.S., and loosen fees on exports going out of the U.S.
Target also makes its case on its website, with a statement called "Five Things to Know About the Border Adjustment Tax." It sets out the company's arguments against the policy and explains some of the potential impact it could have on consumers.
The first point it makes is the toll it would take on American shoppers, who could see increased prices on "everyday essentials by up to 20 percent." Target says many of its customers are middle-class working families that can't afford such a hike.
"We’re not talking about luxury goods, but things like school clothes, shoes, groceries, medicine, electronics and bed sheets," the retailer says. "That would add up fast for, say, a new mom or dad stocking up on baby supplies, or someone moving into their first apartment."
The counterpoint to this, from supporters of the import tax, is that some of the extra tax companies like Target would have to pay would be offset by a corresponding rise in the value of the dollar – though it would need to rise by 25 percent to offset the tax completely.
It's also worth noting that the GOP intends to reduce general corporate taxes from 35 to 20 percent, also reducing the tax burden for a company like Target (which supports this move, unsurprisingly).
The thinking behind the border tax, that it would encourage companies to source their supplies from America, rather than foreign countries, doesn't translate well to retail, Target argues, noting that 97 percent of apparel sold in the U.S. comes from overseas, same with electronics.
"We’re never going to grow bananas in Michigan or coffee beans in Ohio," the company adds, noting the imported nature of grocery store supplies.
Speaking before a House Ways and Means Committee hearing, KARE 11 reports that Cornell told lawmakers: "Under the new border adjustment tax, American families -- your constituents -- would pay more so many multinational corporations can pay even less."