an advantage than before. And this change would be permanent. The crown jewel might be tarnished, and long-term sales would be hurt by the higher cost of gasoline.
Koch’s public relations team claimed that the Pine Bend refinery could actually benefit from the BAT, because the tax would raise gasoline prices. It was difficult to disprove this hypothetical argument, but three former Koch commodities traders said that it was almost inconceivable that a BAT would benefit Pine Bend. One oil trader, intimately familiar with the economics of Pine Bend, said there was “no scenario” under which the refinery would benefit from a border tax. Another pointed out that any 20 percent increase in the cost of inputs could hurt a refining operation, even if gasoline prices rose. Regardless of the hypothetical scenarios from which the Pine Bend refinery might benefit, there was no doubt that a BAT could be disruptive to Koch’s refinery business.
The Koch political network moved against this threat hard and early. The network launched its attack on the BAT in December and January, before Trump’s inauguration and before the public, or even most Congress members, started thinking about the measure. The goal seemed clear: to kill the BAT in the crib, before a public debate could even begin.
The attack was well fashioned by Koch’s political team. After the Brattle Group report was released in December, Koch Industries did not talk in detail about the harm that the BAT posed to its oil business. Instead, the company’s political proxy groups framed the issue with different arguments. Americans for Prosperity started talking about the US tax code in terms of “crony capitalism” and a “rigged economy.” The group presented BAT as an odious corporate giveaway. Corporations were getting a tax cut, the group said, because the corporate tax rate would fall from 35 percent to 20 percent. But consumers would pick up the bill because prices for imported goods—like toys, gasoline, and electronics—would rise. This was a mischaracterization of what the BAT would do. More than a hundred countries had imposed the BAT (or a similar tax) and data showed that the tax caused consumer prices to rise, but only temporarily. The reasons for this were complicated, but they derived from the fact that a BAT strengthened the value of the home country’s currency. The incentive for domestic manufacturing would add to this effect, creating jobs and raising wages. The real entities that were harmed by a BAT were companies that sought to shift jobs overseas, and also the richest Americans who owned stocks in such companies. A Tax Foundation report estimated that the financial burden of the BAT would fall primarily on the richest 1 percent of Americans.
In the winter months of January and February, while most public attention was focused on the fight over Obamacare, Americans for Prosperity fully mobilized to defeat the BAT. In May, the group launched a high-profile campaign called “Un-Rig the Economy,” which made defeating the BAT a centerpiece of its efforts. AFP released a statement saying that “72 percent of Americans feel that our ‘economy is rigged to advantage the rich and powerful.’ And the biggest contributor to our country’s rigged economy is the US tax code.”
In fighting the BAT, Koch Industries seemed out of step with Republican voters. Koch had successfully grafted the fight against a cap-and-trade bill to the Tea Party movement, but it was more difficult to graft opposition to the BAT to a conservative movement that had just voted for an America First president. The Freedom Caucus, which was Koch’s strongest ally in Congress, was slow to pick up Koch’s cause. When the caucus met privately in January to discuss the BAT, the group was split. Some members supported the notion of cutting tax rates and shifting jobs back onshore.
After the closed-door meeting, Mark Meadows sounded open to the idea of supporting the BAT, even if he had some reservations. “The border adjustment thing is at twenty percent, so that would make sense,” Meadows told CQ Roll Call.
The weekend after Meadows made his comments, Americans for Prosperity sent a letter to Kevin Brady, chair of the Ways and Means Committee, making AFP’s opposition to the BAT clear, claiming that the BAT would hurt low-income Americans by making imports more expensive. That weekend, AFP’s president, Tim Phillips, gave a stirring speech at a donor conference in California, saying that the group would pour its resources into defeating the BAT because it was unprincipled. Within weeks, Meadows changed his view of