Conservative split over border-adjustment tax imperils Trump’s reform goal

“It is a simple and elegant way to get good tax compliance,” said Douglas Holtz-Eakin, a Republican economist and president of the right-leaning American Action Forum, a nonprofit tied to a “super PAC” that backs House Republicans.

Some conservatives oppose it for the same reason: In their view, such a tax would be too easy to increase, with the potential costs to Americans hidden behind rising prices.

Groups like Americans for Tax Reform — headed by Grover Norquist, perhaps Washington’s most famous anti-tax crusader — have praised the border tax proposal, saying it would put American businesses “on a level playing field” with foreign competitors. Retailers who import many of their goods are lobbying against the idea, while domestic manufacturers like Boeing and Caterpillar — whose interests figure heavily in Mr. Trump’s economic thinking — are supporting it.

The Koch network and groups like the Club for Growth, which for years have targeted what they call “crony capitalism” in Washington, have opposed the border tax as an unnecessary tax increase and a form of favoritism that would hurt the economy. But Mr. Trump and his team have pledged to target what they see as a more insidious kind of cronyism, including unfettered free trade that some Trump advisers say benefits wealthy elites at the expense of American workers.