Tax

Tax reform means money can go where it’s needed most: empowering manufacturing workers to invest in the community, support their families, grow the economy, create more secure jobs, increase wages and make manufacturing in the U.S. more competitive.

Press Releases

Manufacturers React to President Biden’s First Speech to Congress

Timmons: “Manufacturers are focused on building the next, post-pandemic world.”

Washington, D.C. – Following President Joe Biden’s first presidential address to Congress, National Association of Manufacturers President and CEO Jay Timmons released this statement:

“Thanks to the leadership of vaccine manufacturers and the Biden administration’s successful vaccine distribution efforts, Americans are getting back to the activities and the people they love. Though the capacity limits in the House chamber tonight remind us that we still have a long way to go, our future is looking brighter.

“We look forward to working with President Biden to achieve historic infrastructure investment, including the many priorities offered in our ‘Building to Win’ plan, which, in addition to identifying areas of investment, also provides multiple funding solutions.

“Manufacturers have also provided roadmaps on critical issues ranging from immigration to climate change. We’re ready to work with President Biden and members of any party to deliver bipartisan progress on these issues and more, all while ensuring we’re strengthening the manufacturing workforce, not jeopardizing manufacturing growth in the United States.

“To that point, raising taxes on manufacturers—including many small businesses that pay at the individual rate—would stop our recovery in its tracks; we would lose 1 million jobs in just the first two years alone. Small manufacturers would be especially hard hit at this critical juncture, restricting their ability to raise wages and benefits, hire more workers and invest in their communities. Similarly, changes to the longstanding tax rules on the transfer of family businesses to the next generation of manufacturers would cost American jobs.

“Returning to archaic tax policies and one of the highest business tax rates in the developed world is not the way to build our future, nor are federal policies to force workers to join a union. Anti-worker policies like the PRO Act would inject uncertainty by driving a wedge in established employee–employer relationships and curtail future manufacturing investments that support our communities and families.

“As we continue to get armed against COVID-19, manufacturers are focused on building the next, post-pandemic world—one that affords even greater opportunity for all Americans.”

Background:

The NAM continues to put forward commonsense proposals to educate and inform policymakers on ways to strengthen manufacturing in America while achieving our shared objectives.

-NAM-

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 12.3 million men and women, contributes $2.35 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Business Operations

How Tax Reform Helped Optimax Invest in Workers

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After the passage of tax reform in 2017, the lower corporate tax rate and faster tax depreciation of capital equipment purchases enabled Optimax Systems—a manufacturer specializing in optics for semiconductor, aerospace and defense technologies—to reinvest in its workers and operations.

Hiring new workers: Since 2018, the New York manufacturer has hired aggressively, increasing its full-time headcount from 290 to 340. It has also raised salaries for employees, with an average annual increase of 4.8% since 2017—well above the company’s annual increases before 2017. Optimax sees the increases in hiring and wages as a vote of confidence in its workforce—and as a way to pay forward the benefits of tax reform.

Expanding their operations: Since 2018, Optimax has doubled the size of its manufacturing facility, increasing the space from 60,000 square feet to 120,000 square feet. The company also increased investment in equipment, boosting its annual investment from an average of roughly $3 million per year between 2014 and 2017 to an annualized rate of more than $7 million per year since 2018.

What we’re doing: To support companies like Optimax and its customers, the NAM is leading the effort to ensure that the tax code continues to incentivize growth, as well as working to make manufacturers’ priorities and concerns known to the Biden administration and lawmakers. For companies like Optimax, maintaining the competitive tax rate is critical, which is why the NAM is vocal about the potential harm of tax hikes.

The costs of tax hikes: A new study conducted by Rice University economists for the NAM found that increasing the corporate tax rate along with other harmful tax changes could lead to 1 million fewer jobs in the first two years.

  • “As we slowly emerge from the economic catastrophe caused by COVID-19, American businesses are at a pivotal point in our nation’s history,” said NAM President and CEO Jay Timmons. “Manufacturers can, and should, lead the economic recovery in the wake of the pandemic. But this study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs.”

The last word: “Optimax has a mission of enabling customer success and employee prosperity. We have learned, through 30 years of experience, that there is no better way to do this than to reinvest our profits back into the business and back into our people,” said Optimax Controller Tom Starin. “Tax reform has freed up an additional piece of the profit pie, allowing the company to double down, quite literally, on our mission of enabling customer success and employee prosperity.”

Press Releases

Manufacturers Launch Ad Campaign to Protect American Jobs

Timmons: Now is not the time to take a step back; it’s time to build the next, post-pandemic world, which can only be done with a competitive tax code

Washington, D.C. – Following the release of the National Association of Manufacturers’ study on the impact of proposed tax increases under consideration in Congress, the association is launching a six-figure ad campaign calling on Congress to protect manufacturing jobs. The print, radio and digital ads will run in Washington, D.C., and in key states.

“Corporate tax hikes and other tax reform rollbacks under consideration could lead to 1 million fewer jobs in the first two years alone and would drag down economic growth,” said NAM President and CEO Jay Timmons. “After the 2017 tax reform delivered more globally competitive tax rates, manufacturers kept our promises to create jobs, raise wages and benefits and invest in our communities. Now is not the time to take a step back; it’s time to build the next, post-pandemic world, which can only be done with a competitive tax code.”

Background:

Key findings from the NAM research paper, “Dynamic Estimates of the Macroeconomic Effects of Tax Rate Increases and Other Tax Policy Changes,” on the impact of proposed tax increases include the following:

  • America would lose 1 million jobs in the first two years after implementation and cause a loss of 600,000 jobs on average each year over the next decade.
  • By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031.
  • Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively.

Background on manufacturing growth following the enactment of tax reform in 2017:

  • In 2018, manufacturers added 263,000 new jobs. That was the best year for job creation in manufacturing in 21 years.
  • In 2018, manufacturing wages increased 3% and continued going up—by 2.8% in 2019 and by 3% in 2020. Those were the fastest rates of annual growth since 2003.
  • Manufacturing capital spending grew by 4.5% and 5.7% in 2018 and 2019, respectively.
  • Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008.

Read the full study here and click here for a summary of the study’s details and findings.

-NAM-

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 12.3 million men and women, contributes $2.32 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Policy and Legal

Tax Increases Would Cost a Million Jobs

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NOTE: The lead sentence was revised to better reflect the full scope of the NAM’s study, which includes corporate tax increases recently proposed by the Biden administration, as well as other tax increases and changes to the tax code under consideration.

Corporate tax hikes and other tax reform rollbacks under consideration could lead to 1 million fewer jobs in the first two years, according to a new study conducted by Rice University economists for the NAM.

The calculation: Economists John W. Diamond and George R. Zodrow calculated the effects of increasing the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions and more.

The costs: The researchers found that these changes would cause large negative effects for the economy. The worst of these would include:

  • 1 million jobs lost in the first two years;
  • By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031; and
  • Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively.

The study also notes the following:

  • Investments in intangibles, or “firm-specific capital,” are highly mobile and more sensitive to marginal tax rate changes. Such investments would fall 2.7% by year two and would be down a total of 3.8% by year five.
  • The average annual reduction in employment would be equivalent to a loss of 600,000 jobs each year over 10 years.
  • Real wages would fall by 0.6% in the long run, and total labor compensation, including wages and benefits, would decline by 0.6% initially before falling by 0.3% after 10 years. In the long run, total compensation would also decline by 0.6%.

The NAM says: NAM President and CEO Jay Timmons said in response to the study, “Manufacturers want to help President Biden achieve his goal of creating jobs in America and strengthening the supply chain so that our country does not face critical shortages, especially during times of national crises.”

  • “As we slowly emerge from the economic catastrophe caused by COVID-19, American businesses are at a pivotal point in our nation’s history. Manufacturers can, and should, lead the economic recovery in the wake of the pandemic. But this study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs.”

Alternative solutions: The NAM strongly supports President Biden’s focus on bold infrastructure investment, which can be achieved through a combination of revenue sources like those identified in its policy blueprint “Building to Win.”

Press Releases

Consequences of a Higher Corporate Tax Rate: 1 Million Jobs Lost in First Two Years

Timmons: “America can’t afford that, especially now.”

Washington, D.C. – The National Association of Manufacturers released a new study detailing the short- and long-term damage to the American economy under tax proposals to increase the corporate tax rate and repeal policies that made manufacturing in America more competitive around the world.

“Manufacturers want to help President Biden achieve his goal of creating jobs in America and strengthening the supply chain so that our country does not face critical shortages, especially during times of national crises.

“As we slowly emerge from the economic catastrophe caused by COVID-19, American businesses are at a pivotal point in our nation’s history. Manufacturers can, and should, lead the economic recovery in the wake of the pandemic. But this study tells us quantitatively what manufacturers from coast to coast will tell you qualitatively: increasing the tax burden on companies in America means fewer American jobs. One million jobs would be lost in the first two years, to be exact,” said NAM President and CEO Jay Timmons.

“After decades of advocating for a tax system that provided competitive rates and modern international tax provisions, manufacturers in America kept our promises following the enactment of the 2017 tax reforms: we raised wages and benefits, we hired more American workers, and we invested in our communities. If we undo those reforms, all of that will be put at significant risk. Manufacturing workers will lose out on jobs, growth and raises. We should be building on that progress, not rolling it back. But the conclusion of this study is inescapable—follow through with tax hikes that give other countries a clear advantage and we’ll see far fewer jobs created in America.”

The study calculated the effects of increasing the corporate tax rate to 28%, increasing the top marginal tax rate, repealing the 20% pass-through deduction, eliminating certain expensing provisions and more. The negative consequences would include the following:

  • One million jobs lost in the first two years;
  • By 2023, GDP would be down by $117 billion, by $190 billion in 2026 and by $119 billion in 2031;
  • Ordinary capital, or investments in equipment and structures, would be $80 billion less in 2023 and $83 billion and $66 billion less in 2026 and 2031, respectively;
  • And more.

“There are some who are well-meaning and have suggested that the U.S. corporate tax rate should increase, but not by as much as the 28% proposed. Unfortunately, what that means is that America will still lose jobs and investment, just not quite as much. America just can’t afford that, especially now,” Timmons said.

Click here for a summary of the study’s details and findings. Read the full study, “Dynamic Estimates of the Macroeconomic Effects of Tax Rate Increases and Other Tax Policy Changes,” conducted by Rice University economists John W. Diamond and George R. Zodrow,” here

Background on manufacturing growth following the enactment of tax reform in 2017:

  • In 2018, manufacturers added 263,000 new jobs. That was the best year for job creation in manufacturing in 21 years.
  • In 2018, manufacturing wages increased 3% and continued going up—by 2.8% in 2019 and by 3% in 2020. Those were the fastest rates of annual growth since 2003.
  • Manufacturing capital spending grew by 4.5% and 5.7% in 2018 and 2019, respectively.
  • Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008.

Manufacturers strongly support President Biden’s focus on bold infrastructure investment, which can be achieved through a combination of revenue sources like those identified in the NAM’s ‘Building to Win.’

-NAM-

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 12.3 million men and women, contributes $2.32 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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

Press Releases

Manufacturers: Build Now for the Post-Pandemic World

When manufacturing is strong, America is strong

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement on President Joe Biden’s infrastructure framework.

“The President’s proposal for historic levels of infrastructure investment reflects many of the investment priorities in the NAM’s ‘Building to Win’ plan, and we look forward to reviewing the details. President Biden’s clear focus on strengthening manufacturing and the workforce of the future shows that he is truly committed to building the next post-pandemic world—one that is stronger and more resilient than in pre-pandemic times.

“Manufacturers have played a leading role in the fight against COVID-19, and we will continue to play a leading role in our economic recovery. When manufacturing is strong, America is strong.

“One thing is clear for our industry, though. Raising taxes on manufacturers would fundamentally undermine our ability to lead this recovery. Our industry fought for decades to achieve a tax system that includes competitive rates and modern international tax provisions. As a result of the 2017 reforms, manufacturers kept our promises: we raised wages and benefits, we hired American workers, and we invested in our communities. Raising taxes on manufacturers here at home would jeopardize all of that and make it more difficult for them to compete in the global economy—putting investment, jobs and livelihoods at risk. We believe strongly in bold infrastructure investment, and we know it can be achieved through a combination of revenue sources like those we identified in the NAM’s ‘Building to Win,’ which includes user fees and bond financing for capital projects. We also know that making the men and women who make things in America pay for the infrastructure projects that will benefit all Americans just doesn’t make sense and would harm their future. Let’s keep moving forward and not turn back the clock to the archaic tax policies that gave other countries an advantage over America.

“To be sure, President Biden’s proposal on infrastructure investment is strong, necessary and welcome. Achieving our shared goals will be the result of debate, discussion and collaboration with the administration and both parties in Congress. We can achieve the President’s investment objectives while holding firm against financing proposals that would severely harm the ability of manufacturers to invest and hire workers here in the U.S. We look forward to engaging with all stakeholders to achieve an outcome that benefits all economic sectors and all Americans.”

Background on manufacturing growth following the enactment of tax reform in 2017:

  • In 2018, manufacturers added 263,000 new jobs. That was the best year for job creation in manufacturing in 21 years.
  • In 2018, manufacturing wages increased 3% and continued going up—by 2.8% in 2019 and by 3% in 2020. Those were the fastest rates of annual growth since 2003.
  • Manufacturing capital spending grew by 4.5% and 5.7% in 2018 and 2019, respectively.
  • Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008.

-NAM-

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 12.3 million men and women, contributes $2.32 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Policy and Legal

Timmons Defends Tax Reform and Advocates Investment Incentives

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When leading members of Congress are asked what organizations were decisive in passing landmark tax reform in 2017, the NAM is often one of the first organizations named. So, when a powerful Senate committee decides to explore issues related to taxes and competitiveness of U.S. manufacturers, the NAM gets the call.

NAM President and CEO Jay Timmons testified before the Senate Committee on Finance on Tuesday to push forward a post-partisan consensus on a number of key manufacturing priorities. A few highlights are below, and you can read the full testimony here.

Pandemic response: “Today, one year after health restrictions began, the light at the end of the tunnel is growing brighter by the second—thanks to the innovation of pharmaceutical manufacturers. Their heroic work, combined with the previous administration’s Operation Warp Speed and this Congress and this administration’s focus on and investment in vaccine distribution, is now saving about 2 million American lives every single day.”

Supply chains: Timmons also spoke about the need to strengthen supply chains and touted the NAM’s supply chain policy recommendations, calling out three in particular:

  • The need for predictability and stability in the tax code. Timmons spoke about the benefits of tax reform for manufacturers, reinforced how the industry has kept its promise after the historic law was passed and asked Congress to protect the benefits the law provided.
  • The need for a tax code that supports innovation—specifically by preserving manufacturers’ ability to invest in research and development.
  • The need to recognize that “policies that are successful in growing manufacturing will require significant capital expenditures by the small and medium-sized firms that are the backbone of our domestic supply chain.”

Challenges ahead: Timmons called out two proposed changes to the tax code that would make it more difficult for those businesses to invest:

  • “More stringent limitations on interest deductions and the phase out of immediate expensing will take effect in the years ahead. If not reversed, these changes will make it hard to grow manufacturing.”

Manufacturers speak: In addition to Timmons, Intel Corporation Executive Vice President and Chief Financial Officer George S. Davis and Ford Motor Company Vice President of Global Commodity Purchasing and Supplier Technical Assistance Jonathan Jennings also testified at the hearing.

Questions to consider: Timmons closed by asking a series of questions about whether America would meet its moment—including by ensuring competitive tax rates, investing in infrastructure, developing trade agreements that protect American workers and enacting comprehensive immigration reform that offers a path to citizenship for undocumented immigrants.

His response: “If the answer to those questions is ‘yes,’ if we tackle these fundamental issues, then I’m certain that this Next World that we are building in the aftermath of the pandemic will be built by American workers in American factories, restoring American leadership in the world.”

Press Releases

Timmons Opening Statement to U.S. Senate Committee on Finance Hearing on Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons delivered the following opening statement at a U.S. Senate Committee on Finance hearing entitled Made in America: Effect of the U.S. Tax Code on Domestic Manufacturing.

Click here to watch the hearing.

Remarks as prepared for delivery:

Good morning. Thank you, Mr. Chairman.

I’m joining you virtually because of the pandemic that this country has endured for more than a year now. But this pandemic is far more than a story of economic hardship and painful loss. It’s also a story of communities and companies rising to the challenge.

America’s manufacturing workers mobilized in ways reminiscent of their resolve during World War II, when manufacturers became the arsenal of democracy. The companies joining me today are part of this effort. Ford remade shop floors to make ventilators and face shields. Intel accelerated access to technology to combat the pandemic. From iconic global brands to family-owned shops, manufacturers answered the call.

Today, one year after health restrictions began, the light at the end of the tunnel is growing brighter by the second—thanks to the innovation of pharmaceutical manufacturers. Their heroic work, combined with the previous administration’s Operation Warp Speed and this Congress and this administration’s focus on and investment in vaccine distribution, is now saving about 2 million American lives every single day.

Manufacturing workers’ achievements are all the more impressive when you consider the disruptions they had to overcome. This pandemic exposed and exacerbated serious supply chain issues that we now must address as we work to build the next post-pandemic world.

In spring 2020, the National Association of Manufacturers released our plan for strengthening manufacturing supply chains. I’ve discussed it directly with some of you.

Our goal is your goal: Ensuring that the next dollar invested in manufacturing is invested in America.

The plan is comprehensive, from taxes to workforce. The central premise is that incentives—not punitive measures—will allow us to achieve our shared goal.

Let me call out three key recommendations.

Number one: We must recognize the importance of predictability and stability in the tax code. Tax reform made manufacturers more competitive, driving historic job creation, wage growth and productivity in its immediate aftermath. Let’s not undo that progress.

Number two: Manufacturers in America can only remain at the cutting edge if our tax code supports innovation. Unfortunately, it will do just the opposite starting next year.

A looming change to the tax treatment of research costs will make it more expensive to perform R&D—potentially costing America its innovation edge.

Number three: Let’s recognize a simple truth—policies that are successful in growing manufacturing will require significant capital expenditures by the small and medium-sized firms that are the backbone of our domestic supply chain.

But two other looming changes to the tax code will make those expenditures difficult. More stringent limitations on interest deductions and the phase out of immediate expensing will take effect in the years ahead. If not reversed, these changes will make it hard to grow manufacturing.

Ultimately, ensuring that next manufacturing dollar is invested right here in America requires looking at the entire business climate.

And that means that this Congress will have to address other pressing questions.

Will tax rates for businesses of all sizes remain competitive—or better yet, become more competitive—so that we can keep attracting investment?

Will the regulatory system provide certainty and clarity?

Will health care become more affordable—without compromising free market principles?

Will this nation finally make the bold investments in infrastructure that are long overdue?

Will energy be abundant, affordable and reliable?

Will export opportunities increase while we enforce our existing trade agreements to protect American workers?

And will we achieve comprehensive immigration reform to ensure that those hidden in the shadows or brought here as children can become permanent, productive members of society?

If the answer to those questions is “yes,” if we tackle these fundamental issues, then I’m certain that this Next World that we are building in the aftermath of the pandemic will be built by American workers in American factories, restoring American leadership in the world.

Thank you, and I look forward to your questions.

-NAM-

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 12.3 million men and women, contributes $2.32 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 63% 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.

Business Operations

Tax Policy Makes Innovation Possible for Big Ass Fans

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For Big Ass Fans, a Kentucky-based company that manufactures fans, evaporative coolers and controls for industrial, agricultural, commercial and residential use, the eye-catching name isn’t the only thing that makes them distinctive. The company is also a leader in research and development, crediting U.S. tax policy with supporting its innovations and the jobs they create.

Investing in innovation: BAF has spent millions of dollars in R&D, even building an R&D lab on its global headquarters campus in 2008. Most recently, it pioneered new ways of disinfecting air to keep manufacturing employees healthy during the COVID-19 pandemic. And when Congress approved tax reform in 2017—including a lower corporate tax rate—the company got additional fuel for its efforts.

  • “The more incentives that are there for us to create and for our customers to purchase, the more we can deliver for everyone,” said BAF Government and Public Relations Director Alex Risen.

Risen cautions, however, that a higher corporate tax rate could impact the company’s ability to grow. Meanwhile, a prospective tax change on R&D spending could stymie innovation by requiring the amortization of expenses (as opposed to current tax policy, which allows expenses to be fully deducted in the same year).

  • “We’re always going to innovate. That’s in our DNA. But if our customers have higher corporate tax rates, that can take money out of our pockets and theirs,” said Risen. “If this new R&D tax policy detracts from a company’s ability to push and pioneer…then we’re all at risk of losing out on expedited innovation.”

Creating American jobs: BAF isn’t just using its revenues to invest in innovation; it’s also working to bring jobs and supply chains into the United States. In addition to its headquarters in Lexington, Kentucky, the company has offices in Canada, Australia and Singapore. Up until recently, it also had a manufacturing facility in Malaysia in addition to a sales office there—but BAF is in the process of moving those production jobs to the United States.

  • “It doesn’t just mean new jobs at BAF; it brings more business to American vendors and suppliers,” said Risen. “It allows them to continue trying to grow even during a downturn and uncertain times.”

Bolstering supply chains: In addition to job creation, strengthening the supply chain was another top priority for BAF.

  • “We were already working on moving those operations before the pandemic hit, but the pandemic is a reminder that you want to have that supply chain close,” said Risen. “We’ve been fortunate that we haven’t had to slow production down, because the majority of our product is here in our backyard. That speaks to where we want to be as a company that is internationally headquartered in the U.S. but serves 175 countries. We want to do our part in order to make high-end machinery a U.S. export.”

NAM support: To support companies like BAF and its customers, the NAM is leading the effort to ensure that the tax code keeps encouraging innovation. Recently, a bipartisan group of U.S. policymakers introduced legislation that would allow manufacturers to continue to deduct their R&D expenses immediately—a move that the NAM advocated for. The NAM is also working to strengthen U.S. supply chains, releasing an agenda for such actions last year.

The bottom line: “A high tide floats all boats,” said Risen. “We need to continue to innovate and deliver for companies in America—and we need to help Americans push the envelope, innovate and deliver for all of us.”

Policy and Legal

Lawmakers Push for Retroactive Tax Increase

Key members of Congress are seeking to include a significant rollback of net operating loss relief in a COVID-19 relief bill, according to Politico (subscription).

What it is: When a company’s deductible expenses are greater than its revenues, it results in a net operating loss. Under the CARES Act, companies with losses from 2018, 2019 and 2020 can carry these losses back for the five previous years and have the losses offset up to 100% of taxable income, providing critical liquidity through tax refunds.

  • Some members of Congress now want to limit carrybacks of businesses’ 2020 losses to only two prior tax years, while also limiting the amount of relief for pass-throughs.

Why it matters: The provision provides important liquidity support, especially for small and medium-sized manufacturers. Eliminating or reducing it could make it more challenging for manufacturers to keep workers on the payroll and stay in business, says NAM Senior Director of Tax Policy David Eiselsberg. Ultimately, it would amount to a major retroactive tax increase on businesses and workers that are critical to our pandemic response.

Blast from the past: As President Barack Obama said in a 2009 interview with MSNBC’s Chuck Todd, “The last thing you want to do is raise taxes in the middle of a recession.”

A more recent statement: Treasury Secretary Janet Yellen said during her confirmation hearing that the Biden administration’s “focus right now is not on tax increases; it’s on programs to help us through the pandemic.”

The NAM says: “Net operating loss relief is a vital tool for manufacturers that are working hard to stay in business and support their employees across the country,” said Eiselsberg. “Undoing this critical liquidity support would not only hurt the ability of businesses to get through the pandemic but would also result in a retroactive tax increase on a sector that is key to America’s success.”

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