Republicans are working to find a way to raise enough revenue to offset their plans for steep tax cuts after tax writers and the Trump administration announced Thursday that the border adjustment tax is officially off the table.

The border adjustment tax—a key revenue raiser in the House GOP’s “A Better Way” tax reform proposal—was strongly supported by House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, who argued that it was the best way to combat base erosions and even the playing field.

However, critics feared that the provision, which would have placed a levy on imports while exempting exports, would lead to an increase in prices on a number of goods, ultimately placing a financial burden on consumers.


“The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas,” the Ways and Means Committee’s official press release reads.

“And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base,” the statement adds.

“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”

With GOP lawmakers hoping to use the reconciliation process—a tool allowing a budgetary-related measure to pass with just a simple majority in the upper chamber—the death of the border adjustment tax could prove to be problematic, as the measure can’t increase the deficit after a 10-year window under parliamentary rules.

The provision would have generated a whopping $1.2 trillion in revenue over the course of a decadeaccording to Tax Foundation, providing the necessary means to offset their plans to slash both corporate and individual rates.

Despite receiving the backing of top Republicans, both Brady and Ryan said shelving the idea was necessary to move forward with negotiations to craft a plan to pass permanent tax reform this year.

“You know I’m convinced border adjustability is the best solution for keeping jobs in America and bringing them back from overseas, and helping lower taxes for local businesses,” Brady told reporters Thursday. “We had a healthy debate on that provision, but in order for us to unify it was important to set it aside for now.”

According to the Texas Republican, he is working with members of the Senate Finance Committee and administration officials to ensure they can find a way to bring rates down as low as possible.

“I’m confident that we’re getting close to a solution that addresses that problem of U.S. companies and profits moving overseas,” he continued. “We still have work to do, but I like the path we’re going.”

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