An important new study released by the NAM shows that failure to reverse a new, stricter limit on interest deductibility could cost the United States nearly half a million jobs.
The background: Manufacturing is a capital-intensive industry—and manufacturers often borrow funds to purchase capital equipment and invest in growth. The interest they pay on those loans is tax deductible up to a certain limit. However, a recent change in tax law modified the way that limit is calculated—leaving companies with a smaller deduction and increased costs as they seek to invest in equipment and job creation.
The data: The study published by the NAM paints a bleak picture of the economic impact if Congress fails to take action to fix this problem. According to the EY analysis, keeping a stricter interest deduction in place would increase manufacturers’ cost of capital and lead to reduced investments in the U.S. economy. The result would be lost jobs, reduced employee compensation and lessened U.S. GDP. Specifically, the study finds that the stricter interest limitation will cost the United States:
- 467,000 jobs;
- $23.4 billion of employee compensation; and
- $43.8 billion in GDP.
What’s next: The NAM supports the Permanently Preserving America’s Investment in Manufacturing Act (H.R. 5371/S. 1077), bipartisan legislation that would reverse the stricter limitation and ensure that manufacturers can make critical investments in themselves and their communities.
What we’re saying: “These numbers show the importance of preserving manufacturers’ ability to deduct interest and finance critical job-creating investments,” said NAM Senior Director of Tax and Domestic Economic Policy Charles Crain. “With 467,000 jobs at risk, the NAM is leading the effort to secure a reversal of this harmful change by year’s end.”
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org