Policy and Legal

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 Call for Quick Resolution to Rail Negotiations

Timmons: Delays in concluding the rail negotiations will exacerbate the pain of inflation and supply chain disruptions, and failing to reach an agreem

Washington, D.C. – Following news that White House aides and Cabinet officials spent Tuesday reviewing contingency plans for a work stoppage, including outreach to shippers, truckers and air-freight lines to keep goods moving, National Association of Manufacturers President and CEO Jay Timmons released the following statement on the ongoing negotiations between Class I railroads and labor unions representing the freight rail workforce:

“For years now, America’s manufacturing workers have endured the effects of rapidly rising material costs and severe supply chain disruptions, and our member surveys have shown quarter after quarter that these are among the top challenges affecting manufacturing growth in America. Further delays in concluding the rail negotiations will exacerbate the pain of inflation and supply chain disruptions, and failing to reach an agreement before Friday’s deadline would devastate the movement of manufactured products that families depend on,” said Timmons. “The Presidential Emergency Board has announced reasonable recommendations that nearly all parties have accepted, so now is the time to resolve remaining issues. We appreciate the administration’s proactive approach, and Congress should be ready to act as a last resort. But manufacturers still believe that the parties have it within their power to resolve these talks before they inflict severe economic damage.”

Currently, the American freight rail network accounts for nearly 40% of total freight volume, and a strike or delay in finalizing a long-term contract would have devastating impacts across surface supply chain networks and economic output. The Association of American Railroads recently released a report that found a nationwide freight rail interruption could cost more than $2 billion per day in lost economic activity.

Background: On Monday, Sept. 12, the NAM sent a letter to congressional leaders reiterating support for the work of the Presidential Emergency Board, which has aided in the talks. The NAM also urged Congress to use its statutory authority to institute the PEB’s recommendations should it become necessary to intervene. The NAM supported President Biden’s selection of an independent and objective PEB and believes that the recommendations announced on Aug. 16 have provided an appropriate framework to avoid disruption to freight rail operations.

-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 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

Policy and Legal

Congress Leans into Electoral Count Reform

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Following the events of January 2021, the processes for counting electoral votes has received renewed attention—and some members of Congress are working together to fix it.

The background: The law that governs the counting of electoral votes following a presidential election, called the Electoral Count Act, was written in 1887.

  • Over the course of more than a century, the law has remained the same, even as ambiguities have caused conflicts and upheavals—most notably after the 2020 election.
  • In the past two years, a bipartisan group of U.S. senators, led by Sens. Joe Manchin (D-WV) and Susan Collins (R-ME), have come together to develop the Electoral Count Reform Act, which is intended to remove ambiguities around the counting of electoral votes.

The proposal: While the ECRA is still being drafted, a few key provisions have been discussed. For example:

  • The ECRA would clarify that the vice president’s role in vote counting is ceremonial, and that he or she is not empowered to throw out or change any state’s electoral votes.
  • The bill raises the threshold for members of Congress to object to a state’s slate of electoral votes.
  • Certain versions of the bill contain provisions that would increase election security, including by increasing penalties against individuals who threaten election officials.
  • The bill would make clear that state legislatures cannot override the popular vote in their states or throw a state’s electors to someone other than the candidate chosen by their voters.
  • The bill would also clear up ambiguities about presidential transition funds, ensuring that these funds can be disbursed to both candidates in the event of a disputed election in order to prevent delays.

Where we are: The current proposal has 17 cosponsors and is bipartisan. It has been through a hearing in the Rules Committee in the Senate, and it seems likely that some form of the ECRA will be considered this fall.

Our take: “The National Association of Manufacturers supports a clear, secure democratic process that doesn’t confer any partisan advantage and reduces opportunities to exploit ambiguities in the law,” said NAM Chief Legal Officer Linda Kelly. “A stable democracy is good for manufacturers and good for the world. That’s something we can all agree upon.”

Policy and Legal

NAM Files Lawsuit Against SEC Over Proxy Rule Rescission

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The U.S. Securities and Exchange Commission has rescinded critical components of a landmark 2020 rule regulating so-called “proxy advisory firms”—and the NAM is fighting back in court.

The long road here: In 2020, after years of NAM advocacy, the SEC finalized a major rule designed to combat proxy firms’ errors and conflicts of interest.

  • Proxy firms influence publicly traded companies by recommending how institutional asset managers should vote in corporate proxy contests, often without any accountability.
  • The 2020 rule required proxy firms to engage with public companies and their investors, and it subjected the firms to the SEC’s anti-fraud standards.

The about-face: Beginning last year, however, the SEC’s new leadership has worked to undermine the rule, including by refusing to enforce it—an unlawful decision the NAM opposed in court. Last week, the SEC officially rescinded many of the rule’s critical reforms.

The response: The NAM has filed a lawsuit against the SEC to preserve the 2020 rule. Our complaint argues that the SEC’s actions are “arbitrary and capricious”—and that the 2022 rescission should be overturned.

The issue: Federal agencies are required to articulate a reasoned explanation for making a new policy decision—especially when that decision is based on the same facts but reaches a different outcome than a recent rule.

  • In this case, the SEC finalized a compromise rule in 2020 based on a decade of bipartisan research, analysis and discussion—and no new evidence has emerged since 2020 given that the SEC prevented the rule from taking effect. So, the agency’s about-face “epitomizes ‘arbitrary and capricious’ rulemaking.”

What we’re saying: “Manufacturers depend on federal agencies to provide reliable rules of the road, and the SEC’s arbitrary actions to rescind this commonsense regulation clearly violate its obligations under the Administrative Procedure Act,” said NAM Chief Legal Officer Linda Kelly. “The NAM Legal Center is filing suit to preserve the 2020 rule in full and protect manufacturers from proxy advisory firms’ outsized influence.”

Press Releases

Every Manufacturer in America Will Benefit from the CHIPS and Science Act

Timmons: Manufacturers thank congressional leaders from both parties who got this bill across the finish line and President Biden and Secretary Raimon

Washington, D.C. – Following President Biden’s signing of the CHIPS and Science Act of 2022, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“Every manufacturer in America will benefit from the CHIPS and Science Act, whether they make chips, make products that require chips or are part of a supply chain disrupted by the semiconductor shortage.

“Manufacturers thank congressional leaders from both parties who got this bill across the finish line and President Biden and Secretary Raimondo for their leadership. The industry will also benefit from the new law’s funding for programs to support the STEM workforce, advanced technology development, excavation of critical minerals, clean energy and more.

“Without a doubt, this legislation boosts manufacturers’ competitiveness. But there’s work to be done. Congress must continue its work on China competition legislation and move forward on policies from the U.S. Innovation and Competition Act and the America COMPETES Act that were left out, such as anti-counterfeiting measures, important trade provisions and further investments in supply chain resilience and workforce development.

“Our economic future and America’s leadership in the world depend on a competitive manufacturing industry. Congress has acted wisely with the CHIPS and Science Act. Now we need Congress to continue standing with manufacturers and focus on policies that will help us compete with China and other countries, not make it more expensive to make things in America.”

-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.

Policy and Legal

Manufacturing Voters Oppose Corporate Minimum Tax

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The vast majority of manufacturing voters in Arizona disapprove of the U.S. Senate’s proposal to impose a “corporate minimum tax,” according to the results of a joint NAM–Arizona Chamber of Commerce & Industry snap poll yesterday.

The results: More than 90% of the manufacturing voters polled are against the tax, while 91% said it would harm manufacturers’ ability to invest in their businesses, upgrade facilities and buy new machinery.

  • Respondents also said the measure would put both manufacturing jobs and the U.S. economy in jeopardy.

The NAM’s view: “With the U.S. and Arizona economies already showing signs of weakening, this is the wrong time to further undermine growth and the manufacturing sector’s overall competitiveness,” NAM Chief Economist Chad Moutray said.

  • Moutray cited analyses by the nonpartisan Joint Committee on Taxation and the NAM that found the tax would disproportionately harm manufacturers.
  • This tax “will make it harder to hire more workers, raise wages and invest in our communities,” Moutray continued. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

The Arizona Chamber says: “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,” Arizona Chamber of Commerce & Industry President and CEO Danny Seiden said.

  • “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.”
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

Tax Reform Bought a Manufacturer New Equipment and a Brighter Future

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The oldest forging machine at Phoenix manufacturer Valley Forge & Bolt dates all the way back to 1930. Plenty of other forging equipment was bought used and then refurbished to help the business keep down costs and maintain its generous benefits for employees. In fact, this type of equipment is the most expensive outlay of capital for the company, according to CEO Michele Clarke.

Thanks to the 2017 tax reform law, however, Valley Forge was able to buy new forging equipment for the very first time. It is “a huge game changer,” said Clarke, “when you can buy state of the art equipment.”

She said as much to Senator Kyrsten Sinema, during the senator’s visit earlier this month to Valley Forge’s facility. Along with CFO Byron Harrod, Clarke spoke to us recently about tax reform’s full range of benefits for their company—and why policymakers should not threaten the gains they and other Arizona manufacturers have made.

A small manufacturer on the rise: Valley Forge is poised to have its best sales year in its almost 50-year history, thanks in large part to the new equipment. Though the pandemic put a temporary dent in its progress, it has seen a marked jump in sales since 2017.

  • The company also boosted its employment by 15 to 20% in 2018, rising to 100 workers for the first time, according to Harrod.

Benefits secured: The company makes a point of providing expansive health care coverage, with only a nominal fee for employees. The savings from tax reform has helped it maintain this commitment to employee health, as well as its 401(k) match program.

  • Meanwhile, workers benefit directly from the increase in sales as well. The company has a longstanding incentives program, handing out quarterly bonuses once key goals are met.
  • “Every employee gets money back if we do well,” as Clarke put it.

A better place to work: The new equipment has made Valley Forge not only more productive and profitable, but also a more comfortable working environment.

  • One of the machines it purchased was robotic equipment to grind bolts. “Worst job in the company,” said Clarke. The grinding process removes forging flash so the bolts don’t cut people when handled, and it involves a lot of flying metal chips.
  • “The robot probably costs close to $300,000, and we had to build a special room,” she added. It’s taken a whole year for engineers to program and set up the machine, but the benefits are worth it—“it replaces jobs that nobody wants to do.”

How tax reform helped: In addition to the lower corporate tax rate, certain other provisions in the law were crucial to the company’s equipment purchases.

  • Take full expensing, which allows companies to deduct the full cost of equipment in the year it is bought. “We went each year [since tax reform] to the maximum for full expensing, sometimes more,” said Harrod.

What’s next? The company must keep adding new capacity, said Clarke, so that it doesn’t join the four or five bolting companies that go out of business around the U.S. each year. “We stay alive because of the technology we’ve developed, and we keep making it more advanced.”

  • The company is beginning to produce fasteners with Bluetooth or radio frequency wireless, which can transmit information about their load and whether they have come loose right to your phone.
  • It’s hoping to market these fasteners to the wind industry: “They have men who climb up the towers to tighten the bolts,” Clarke explained. “But the work life in that job is a year and a half.”
  • Thanks to the new bolts, these workers would only have to make that daunting climb when they know the bolts are loosening.

This is why even the threat of a tax increase is so damaging to manufacturers, according to Clarke and Harrod. They need to be certain that their tax burden will not go up in order to plan confidently for the future.

  • “Planning is paramount,” Clarke reinforced. “It takes maybe two years from when a customer first sees [a new product]” until they put in an order.

The NAM says: “Valley Forge is yet one more example of how the 2017 tax reform law helped to power growth for manufacturers,” said NAM Senior Director of Tax Policy David Eiselsberg. “Unfortunately, Congress is considering a major tax on the manufacturing sector that if implemented would reverse the gains from tax reform and hurt the sector’s future competitiveness. As it has done for the better part of year, the NAM will continue to fight against tax increases targeting manufacturers.”

The bottom line: When policymakers start talking about tax increases, “You start to cut back, you think about not replacing engineers who leave,” said Clarke. “You think the government is not on our side; let’s just cut back and make do.”

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