Tax

Press Releases

New Study | Stricter Interest Expense Limits Costs Half Million Jobs

Failing to Address EBIT-Based Limitation Harms Manufacturers’ Competitiveness

Washington, D.C. – Following the release of an analysis on the economic impact of failing to reverse a stricter limitation on deductions for interest on business loans that took effect earlier this year, National Association of Manufacturers Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement.

Key Findings:

The stricter EBIT-based 163(j) interest expense limitation before market adjustments would cost:

  • 467,000 jobs;
  • $23.4 billion of employee compensation; and
  • $43.8 billion in GDP.

“Manufacturers are already facing incredible economic headwinds due to increased input costs, rising interest rates, labor shortages and snarled supply chains. This analysis shows that failing to reverse the damaging change to the tax treatment of interest on business loans disproportionately harms manufacturers at a perilous time—costing hundreds of thousands of jobs and billions of dollars in economic growth.

“America is an international outlier in imposing such a strict interest expense limitation. With nearly half a million American jobs at stake, Congress must act by year’s end to reverse the stricter EBIT-based limitation and allow manufacturers to continue to invest for growth.”

EY’s Quantitative Economics and Statistics group prepared the analysis.

Background:

Prior to 2022, the interest expense limitation was calculated based on a company’s earnings before interest, tax, depreciation and amortization (EBITDA). This year, a stricter limitation based on a company’s earnings before interest and tax (EBIT) took effect. By excluding depreciation and amortization from the calculation, the stricter limitation increases the tax burden on manufacturers that make investments in long-lived capital equipment.

-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 12.8 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.

Policy and Legal

NAM Competes to Win on Taxes

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The NAM is leading the way forward on a range of policies to help boost innovation, opportunity and competitiveness for manufacturers in the United States—and that includes tax policies that ensure manufacturers can continue to compete and win.

The record: During tax reform, the NAM achieved its key priorities—a lower corporate income tax rate, a reduced tax burden on pass-through business income, the adoption of a modern territorial tax system, the retention of the R&D tax credit and the adoption of incentives for capital equipment purchases.

  • Thanks to a more competitive tax code, manufacturers across America have been investing in jobs, facilities and their communities.

The road ahead: Of course, the NAM isn’t taking its eye off the ball. We are committed to protecting our gains and furthering progress—and that means ensuring the tax code continues to incentivize manufacturers’ ability to invest in innovation and growth. We’re focusing on three important tax priorities in the months ahead.

Research and development: On Jan. 1 of this year, a harmful tax change went into effect that makes R&D more expensive in the United States by requiring businesses to deduct their R&D expenses over a period of years.

  • The NAM has been leading the charge to ensure the tax code continues to support innovation by allowing businesses to fully deduct their R&D expenses in the year in which they are incurred. Check out these company stories on the importance of tax policies that support R&D.

Interest deductibility: When manufacturers borrow funds to buy capital equipment, the interest they pay on those loans is tax deductible up to a certain limit. But a recent change in the tax law modified how that limit is calculated—shrinking the deduction, making debt financing more expensive and leaving less capital for job creation and investment.

  • The U.S. is the only OECD country with such a strict interest limitation, so the NAM is working with members of both parties in Congress to reverse the new limit calculation and enhance manufacturers’ ability to compete. Read more about the NAM’s work on this provision here.

Full expensing: Under present law, manufacturers can deduct 100% of their investments in assets with long useful lives, supporting their ability to acquire vital equipment and strengthening their competitiveness. However, the ability to deduct 100% of these costs begins to phase down at the beginning of 2023 and is set to completely expire in 2027.

  • The NAM is leading the business community in advocating for full expensing permanency, joining with members of Congress to support legislation that would create certainty for manufacturers. See how full expensing has benefited small manufacturers in the United States here.

The last word: “The NAM is fighting to protect manufacturers across the country,” said NAM Senior Director of Tax Policy David Eiselsberg. “Protecting R&D, interest deductibility and full expensing will provide the tax certainty necessary for manufacturers to continue to invest in jobs and growth.”

Learn more: Check out the NAM’s full tax agenda in “Competing to Win.”

Press Releases

Manufacturers Unveil Competitiveness Agenda Ahead of Midterm Elections

“Competing to Win” offers a path for bringing the country together around policies, shared values and a unified purpose

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.

-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 12.8 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

Press Releases

Manufacturers Remain Staunchly Opposed to the Inflation Reduction Act

Timmons: These new taxes will still deliver a blow to our industry’s ability to raise wages, hire workers and invest in our communities

Washington, D.C. – Following the release of the text of the Inflation Reduction Act, NAM President and CEO Jay Timmons released the following statement:

“The NAM remains staunchly opposed to the IRA. It increases taxes on manufacturers in America, undermining our competitiveness while we are facing harsh economic headwinds such as supply chain disruptions and the highest rate of inflation in decades.

“We appreciate that the ‘book tax’ has been revised to reflect the importance of job-creating investments in machinery and equipment. But that is insufficient. These new taxes will still deliver a blow to our industry’s ability to raise wages, hire workers and invest in our communities. In addition, the proposed direct negotiations over prescription drugs are a form of price setting and antithetical to the open marketplace of the Medicare Part D program. Pursuing price control policies could threaten future innovation and cures.

“Any desirable elements of this bill can and should be pursued as standalone legislation. As a whole, the bill simply does not position our industry or our country for future growth or global economic leadership and competitiveness, so we urge all lawmakers to stand with us and reject it.”

-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 12.8 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.

Press Releases

NEW: Arizona Snap Poll Shows Manufacturing Voters Strongly Oppose Reconciliation Tax

Washington, D.C. – The National Association of Manufacturers and Arizona Chamber of Commerce & Industry released a new snap poll today showing that an overwhelming majority of manufacturing voters in Arizona disapprove of the U.S. Senate’s plan to raise taxes on manufacturers. More than 90% of manufacturing voters opposed the tax, while 91% agreed that the tax would harm manufacturers’ ability to invest in their business, buy new machinery and upgrade facilities and put manufacturing jobs and economic recovery at risk.

“With the U.S. and Arizona economy already showing signs of weakening, this is the wrong time to further undermine growth and the manufacturing sector’s overall competitiveness. As the nonpartisan Joint Committee on Taxation analysis has shown, the corporate minimum tax is disproportionately focused on manufacturers and will limit the sector’s ability to grow and invest—in Arizona and across the country,” said NAM Chief Economist Chad Moutray. “As the survey shows and as other data indicate, it will make it harder to hire more workers, raise wages and invest in our communities. Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

According to recent analyses by the Joint Committee on Taxation and the NAM, the “corporate minimum tax” currently under consideration in the U.S. Senate will largely fall on the backs of manufacturers, cost almost 220,000 jobs and reduce GDP by nearly $70 billion, while reducing labor income by over $17 billion in 2023 alone.

“Arizona job creators will continue to urge lawmakers to reject this manufacturers tax and instead focus on policies that encourage job growth and strengthen our state and national economic competitiveness,” Arizona Chamber of Commerce & Industry President and CEO Danny Seiden said. “In the face of record-high inflation, supply chain backlogs and a major labor crunch, now is not the time to hammer manufacturers with new taxes.”

Background/Methodology:

Conducted by the NAM analytics team, this snap poll collected 223 responses from a statewide sample of Arizona manufacturing workers, managers and advocates. In total, 80% of the responses came via SMS text to web and 20% came via email.

-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 12.8 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.

Policy and Legal

Book Tax Would Disproportionately Burden Manufacturers

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The proposed “book tax” in the Senate’s reconciliation bill “would overwhelmingly hit U.S. manufacturers,” according to a new analysis by the Joint Committee on Taxation, Congress’s non-partisan tax scorekeeper.

What’s going on: The reconciliation bill, the outline of which was released Wednesday by Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WVA), proposes a 15% minimum corporate levy, or “book tax,” on certain companies.

  • The provision is estimated to raise $313 billion, and JCT finds that manufacturers would be responsible for paying nearly half of it.

What it means: The impact would be swift and devastating to manufacturers and the economy as a whole, said NAM Chief Economist Chad Moutray, who conducted his own analysis of the bill’s effects on the manufacturing sector.

Including direct, indirect and induced effects, in 2023 alone the impact would include:

  • A real GDP reduction of $68.45 billion
  • 218,108 fewer workers in the overall economy
  • A labor-income decrease of $17.11 billion

Targeting manufacturers: “‘This is a domestic manufacturing tax, plain and simple,’” said Senate Finance Committee Ranking Member Mike Crapo (R-ID), who asked for the JCT analysis.

  • “Despite Democrats’ claims, the book minimum tax does not close tax loopholes. Treatment of capital investments, like those made by American manufacturers, differ for book and tax purposes—for good reason,” according to a press release from Senate Finance Republicans.
  • “Congress intentionally designed tax depreciation rules to support domestic investment. Democrats’ tax on U.S. manufacturing would eliminate that benefit.”
Press Releases

Manufacturers: Lawmakers Who Support Manufacturing in America Should Oppose This Reconciliation Bill

Washington, D.C. – Following news of a potential reconciliation agreement among Senate Democrats, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“This proposal is nothing more than a repackaging of the same bad ideas with a new name slapped on it. It is especially harmful because it will undermine manufacturers’ competitiveness at a time when the industry is reeling from supply chain disruptions and record inflation. Manufacturers kept our promises after the 2017 tax reforms, hiring more workers, investing in our communities and raising wages and benefits. Raising taxes now will hurt manufacturers’ ability to keep delivering for our people and mean fewer opportunities for Americans already worried about their financial future.

“Government price controls on pharmaceutical manufacturers are no less destructive. They will weaken our ongoing work to develop lifesaving cures to complex diseases like cancer and Alzheimer’s and harm our responses to health crises. It’s bad for Americans’ health. It’s wrong for our economy.

“While the language purportedly calls for comprehensive permitting reform to be passed by the end of the fiscal year, there is nothing that prohibits Congress from doing exactly that right now. Any member of Congress who is voting for the bill based solely on that language should not do so and should instead push to have a standalone bill considered.

“Lawmakers who support manufacturing in America should oppose this reconciliation bill. It will make manufacturing less competitive and America economically weaker.”

-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 12.8 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.

Press Releases

Manufacturers Launch Ad Campaign to Protect Manufacturing Competitiveness

Tax Increases Do Nothing to Reduce Energy Costs, Address Supply Chain and Inflation Challenges

Washington, D.C. – Amid historic supply chain challenges and inflationary pressures, along with increasing energy costs, the National Association of Manufacturers is launching a six-figure ad campaign calling on Congress to protect manufacturing jobs by opposing new taxes on the industry, including those meant to punish the very energy manufacturers that are being asked to produce more. The print, radio and digital ads will run in Washington, D.C., and in key states across the country.

“Manufacturers have kept our promises—especially after the 2017 tax reforms—to create jobs, raise wages and benefits and invest in our communities. To keep up this winning record, we need Congress to enact policies consistent with our manufacturing competitiveness agenda. That’s how we’ll strengthen supply chains, expand access to affordable, reliable energy and tamp down inflation. Our industry is ready to keep solving problems and create well-paying jobs—but returning to outdated tax policies will impede our progress,” said NAM President and CEO Jay Timmons.

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

  • In 2018, manufacturers added 260,000 new jobs. That was the best year for job creation in manufacturing in 21 years.
  • In 2018, manufacturing wages increased 3.1% and continued going up—by 2.9% in 2019 and 3.0% in 2020. Those were the fastest rates of annual growth since 2003.
  • Manufacturing capital spending grew 4.5% and 5.7% in 2018 and 2019, respectively.
  • Overall, manufacturing production grew 3.2% in 2018, the best since 2010.

The NAM has published research on the impact of rolling back tax reform (study available here and click here for a summary of the study’s findings) and increasing the U.S. Global Intangible Low-Taxed Income (GILTI) tax burden (study available here).

-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 12.7 million men and women, contributes $2.71 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.

Press Releases

Manufacturers Warn of Harmful Impact of Proposed Interest Expense Limitation

Analysis Shows Limiting Interest Deductibility Disproportionately Harms Manufacturers, Costs Jobs

Washington, D.C. – Following the release of an analysis­­­ on the damaging effects of a proposed interest expense limitation under consideration by Congress, National Association of Manufacturers Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement.

“Manufacturers are already facing incredible economic headwinds due to increased input costs, labor shortages and strong inflationary pressures. This analysis shows that limiting tax deductions for interest on business loans disproportionately harm manufacturers at a perilous time—costing hundreds of thousands of jobs and billions of dollars in economic growth at a time when our industry is trying to drive our nation’s recovery.

“When Congress passed the Tax Cuts and Jobs Act, manufacturers raised wages, invested in U.S. operations and spurred growth. Congress should be considering proposals that double down on the TCJA’s winning record rather than considering tax increases that will sabotage our recovery.”

The analysis was prepared by EY’s Quantitative Economics and Statistics group.

 Key Findings:

The EBIT-based 163(j) and proposed163(n) interest expense limitations before market adjustments would cost:

  • 623,000 Jobs
  • $31.6 Billion in Employee Compensation Annually
  • $60.1 billion in GDP Annually

-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 12.7 million men and women, contributes $2.71 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.

Press Releases

New Reconciliation Pay-For Targets Manufacturers in America

New tax will stifle investment in our communities and factories resulting in fewer opportunities across the country

Washington, D.C. – Following the inclusion in the budget reconciliation legislation of a tax on so-called “book income,” the National Association of Manufacturers Vice President of Tax and Domestic Economic Policy Chris Netram released this statement:

“Manufacturers continue to stand in firm opposition against targeting our industry with new taxes to pay for the reconciliation bill. The ‘book tax’ will hit manufacturers harder than other sectors because expanding our operations requires much larger investments in capital equipment than other industries. This new tax doesn’t account for incentives for machinery and equipment purchases and will stifle investment in our communities and factories. If Congress adopts this policy, the result will be fewer opportunities in towns and cities across the country.

“Regardless of intent, these taxes will harm our industry’s ability to drive our economic recovery. The tax reforms of 2017 allowed us to achieve the best year for manufacturing job creation in more than two decades, and wages, benefits and investment surged. Rather than rolling that back or targeting manufacturers with new taxes, we should keep our tax code competitive and build an opportunity economy together.”

Background:

The NAM informed Senate Finance Committee and House Ways and Means Committee leaders of the negative impacts this policy would have for manufacturing. Read the full letter here.

-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 12.4 million men and women, contributes $2.52 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector 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.

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