NAM Pushes Back on Tax Increases
WASHINGTON (Courtesy - National Associaton of Manufacturers) - The NAM is pressing the Biden administration and Congress to tamp down more than $2 trillion in tax increases that are currently a part of the budget reconciliation bill.
Why it matters: The bill will impact manufacturers across the country, causing pain for corporations, international businesses, pass-throughs and family-owned businesses alike.
- Corporate: The bill would increase the top corporate tax rate from 21% to 26.5%, while also making it more difficult to deduct interest on business loans.
- International: The bill would make changes to a variety of provisions that impact manufacturers buying and selling materials and products overseas, raising $300 billion over the next decade by making two key international tax provisions (GILTI and BEAT) more onerous and reducing an existing benefit for U.S. intellectual property.
- Pass-throughs: Manufacturers organized as pass-throughs would face a range of tax increases, leading to a significantly higher tax burden, including a top rate increase of 2.6 percentage points, as well as the virtual elimination of the 20% pass-through deduction and a new 3% surtax on individuals (including owners of pass-throughs) with income greater than $5 million.
- Family-owned businesses: These businesses would be impacted by an increase in the top capital gains tax rate, as well as a reduction of the estate tax exemption down to $10 million—more than 50% below its current level.
What we’re saying: “There’s no getting past the fact that this tax plan adds up to fewer jobs for American workers,” said NAM Senior Vice President of Policy and Government Relations Aric Newhouse in a statement . “We know from experience that competitive tax rates spur job creation, higher wages and investment in communities. That’s exactly what we saw after the 2017 Tax Cuts and Jobs Act as manufacturers kept their promises. 2018 was the best year for manufacturing job creation in more than two decades. We also know from rigorous economic analysis that reverting to archaic tax policies has the opposite effect. A study of proposed tax increases—including a 25% corporate rate—found that America would lose 1 million jobs in just the first two years.”
- “Building a strong economy takes more than wishful thinking; it requires a competitive business environment. Manufacturers are committed to rebuilding our economy and sustaining our recovery—even amid the surge of COVID-19 cases. If lawmakers share that commitment, then they would rethink tax proposals like this. Few policies would stall our recovery faster. Now is not the time to pursue policies in Washington that will hurt the families and communities of manufacturers in America.”
NAM in the news: Newhouse appeared on Fox Business yesterday to push back against these proposed increases. Fox Business also covered the NAM’s response in a written article, as did USA Today (subscription).