Manufacturers React to Recovery-Stunting Tax Hike Proposal
Newhouse: “There’s no getting past the fact that this tax plan adds up to fewer jobs for American workers.”
Washington, D.C. – Following the release of the House Ways and Means Committee’s plan to increase taxes on manufacturers through the budget reconciliation legislation, National Association of Manufacturers Senior Vice President of Policy and Government Relations Aric Newhouse made this statement:
“There’s no getting past the fact that this tax plan adds up to fewer jobs for American workers. 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.”
Study: Negative Consequences of 25% Tax Rate on Manufacturers:
(Source: Dynamic Estimates of The Macroeconomic Effects of Tax Rate Increases and Other Tax Policy Changes)
- 1 million jobs and $107 billion in GDP lost in first two years
- 500,000 jobs lost on average each year over the next decade
Manufacturers on Increasing the Tax Burden:
(Source: NAM’s Q3 Manufacturers’ Outlook Survey)
- Nearly 94% of manufacturers said that higher taxes would be harmful to their businesses.
- Roughly 90% of respondents said that their company would find it more difficult to expand their workforce, invest in new equipment or expand facilities if the tax burden on income from manufacturing activities increased.
- Nearly 91% said that higher taxes would also make it more difficult to raise employee wages.
Manufacturing growth following the enactment of 2017 tax reform:
- In 2018, manufacturers added 263,000 new jobs. That was the best year for job creation in manufacturing in 21 years. (U.S. Bureau of Labor Statistics)
- In 2018, manufacturing wages increased 3% and continued going up—by 2.8% in 2019 and 3% in 2020. Those were the fastest rates of annual growth since 2003. (U.S. Bureau of Labor Statistics)
- Manufacturing capital spending grew 4.5% and 5.7% in 2018 and 2019, respectively. (U.S. Census Bureau)
- Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008. (Federal Reserve Board)
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 $2.35 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