Small retailers: The BAT ‘is going to kill us’

NRF has launched the latest television ads in our campaign against the misguided “border adjustment” tax proposed by House Republicans. And the new spots show up close and personal the impact this initiative would have on small-business retailers who have spent their lives contributing to their communities and creating jobs.

For Erin Calvo-Bacci, owner of CB Stuffer, a specialty chocolate manufacturer and retailer in Swampscott, Mass., the BAT “will be devastating.” Calvo-Bacci is a particularly dedicated business owner – she sold her home and moved into an apartment during the Great Recession rather than close her company’s doors and put its employees out of work.

“I don’t want my company to go away,” an emotional Calvo-Bacci says in the ad. “This is going to kill us.”

[Small retailers] are already struggling to survive in an over-regulated world, and the border adjustment tax would push many of them under water.

Similar sentiments are expressed in ads featuring Vivian Sayward, owner of Vivacity Sportswear in San Diego, and Dave Ratner, owner of Dave’s Soda and Pet City in Agawam, Mass. The ads urge retailers and consumers to go to stopthebat.tax to tell their members of Congress to oppose the BAT.

These three retailers represent the millions of Americans who have made enormous sacrifices to build their businesses but are now at risk of being taxed out of existence. They are already struggling to survive in an over-regulated world, and the border adjustment tax would push many of them under water.

People like Erin, Vivian and Dave are why NRF is fighting so hard to stop the BAT. And they are why we get so frustrated when supporters of the concept put ivory tower theory and experiments from a class in economics ahead of real-world implications for real people.

As anyone who has checked the “made in” tags of their clothing or other possessions knows, retailers rely heavily on imports to provide American families with the products they need at the prices they can afford.

See why America's small retail businesses are worried about a new tax from Washington.

See why America's small retail businesses are worried about a new tax from Washington.

So it should be obvious that the BAT’s 20 percent levy on imported goods would drive up prices paid by U.S. consumers. Retailers’ profit margins – particularly those at small retailers – are too small to “eat” the increased cost. And most mass market consumer goods are no longer made in sufficient quantities in the United States, so retailers could not quickly or easily switch to domestic suppliers.

The impact varies with the type of product in question. But overall, NRF estimates that the BAT could cost the average family as much as $1,700 in added costs in the first year alone. Families could pay hundreds of dollars a year more for clothing and gasoline, and a typical monthly car payment could be $100 higher. Bills for groceries and prescription drugs would also go up.

Some supporters of the BAT have pushed back against that number. They continue to insist that the U.S. dollar will strengthen under the BAT and that a stronger dollar will eventually offset the tax on imports. That’s an interesting economic theory. But that’s the problem – it’s just a theory. And it’s one that could leave consumers paying higher prices – and some small retailers going out of business – while they wait to see whether it proves to be true. It ignores a number of factors, not the least of which are that some countries set their exchange rates based on political considerations, not markets, and that many international contracts are written in U.S. dollars, making currency fluctuation irrelevant.

Consumers and small business owners live in the real world, not an economics classroom. Let’s not risk the realities of their daily lives – or their livelihoods – on the basis of a theory.