How Republicans could try to get importers to support tax reform

House Republicans seeking to overcome resistance to tax reform from retailers and other importers have only one card to play: special rules to ease them into the new system.

Transition rules are the best way to mollify fears about the provision of the GOP tax proposal that most worries CEOs: the plan to adjust taxes at the border.

Under border adjustment, corporations are taxed not on where they are located, but instead whether their products are sold in the U.S. It works by allowing companies to deduct sales abroad from their taxable income, but disallowing deductions of the cost of imported goods.

That last part effectively would entail a 20 percent import tax on goods imported for resale at retailers such as Walmart or on oil imported by refiners like those owned by Koch Industries. Accordingly, those and other companies have launched a major lobbying effort against the GOP plan.

While they might be enticed by other features of the GOP proposal, such as the cut in the corporate tax rate from 35 percent to 20 percent, those companies are willing to oppose the entire package if it includes the import tax.