More than a dozen chief executives from some of the biggest manufacturing companies [in U.S.] called on lawmakers ... to overhaul the corporate tax code and embrace a controversial proposal that would reduce the cost of exports but penalize imports.

In a letter to House and Senate leadership, they argued that the current tax system penalizes American factory workers and restrains business investment and economic growth. Among the 16 executives who signed the letter are Dennis Muilenburg of Boeing (BA), Jim Umpleby of Caterpillar (CAT), Thomas Kennedy of Raytheon (RTN) and Gregory Hayes of United Technologies (UTX)...

The letter underscores the deep division within the business community as Washington debates the most sweeping changes to the American tax system in more than 30 years.

The companies backing the letter are part of the newly formed American Made Coalition and would benefit from the proposal championed by House Speaker Paul Ryan.

That plan would reduce the corporate tax rate from 35 to 20 percent and allow exporters to deduct the cost of production from their taxable earnings. However, companies would not be able to deduct the cost of imports — a feature known as "border adjustment" that effectively imposes a tax on those imported goods.

The proposal is similar to the way European countries treat imports under the value-added tax system, and companies have long complained that American products are more expensive overseas as a result...

The plan faces significant opposition from the retail industry, however, and top executives from Best Buy, Target and Gap, among others, flew to Washington last week to press their case at the White House and on Capitol Hill. They have warned the proposal would raise their costs — and, by extension, prices for consumers. And they have established their own lobbying group, the Coalition for Affordable Products.

In addition, Ryan's proposal has received a lukewarm reception in the Senate so far. At least two Republicans, Mike Rounds of South Dakota and David Perdue of Georgia, have come out against it. About half a dozen others have said they have significant concerns about how the system would work in practice, jeopardizing Republicans' ability to garner the simple majority required for legislation to pass in Senate under budget reconciliation.

However, the White House has yet to weigh in on the proposal — and it could prove the deciding factor in the debate. President Donald Trump has pledged to unveil a "phenomenal" tax proposal within weeks but details remain unclear. During the election, he called for slashing the corporate tax rate from 35 to 15 percent but also repeatedly vowed to slap double-digit tariffs on imports...

This was excerpted from 21 February 2017 edition of CNBC.