Policy and Legal

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.”
Policy and Legal

Exclusive: Sinema Meets with Manufacturers in Arizona, Talks Policy with the NAM

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U.S. Senator Kyrsten Sinema (D-AZ) recently got an in-person look at manufacturing’s success in Arizona on a NAM-arranged tour of Phoenix manufacturer Valley Forge & Bolt. During her visit, which also featured a roundtable with manufacturers from across Arizona, she spoke with the NAM about the successful passage of historic infrastructure legislation without tax increases, the necessity of boosting semiconductor production and more.

  • During the roundtable, Valley Forge & Bolt President and CEO Michele Clarke highlighted the direct impact of the 2017 tax reforms on her ability to invest in her facility and workforce. She thanked the senator for standing against future tax increases on manufacturers and for her leadership on infrastructure investment.

The NAM caught up with the senator after the roundtable for an exclusive interview. Here is some of what she said.

Infrastructure in Arizona: “We’ve got over $5.3 billion coming just to improve our roads and bridges in Arizona,” said Sinema. “That’s critical for the work we’re doing to shorten the supply chain. The benefits of this law will be seen for years to come.”

  • “It provides a real opportunity for manufacturing businesses in Arizona to be able to utilize this energy and these dollars we’ve created to move forward, attract more companies to Arizona, and become a world leader in manufacturing.”

What’s next? “My number one goal now that this [infrastructure] bill has become law is to make sure that it’s implemented quickly, swiftly, and without bureaucracy,” said Sinema.

  • “I want to make sure Arizona is getting its fair share of dollars so that the men and women who are running and working for our manufacturing companies can put these dollars to good use and make sure Arizona retains and grows its status as a domestic manufacturer.”

Creators Wanted: “There’s a need for us to really focus on investment in our education system so that we’re training the highly qualified tradesmen and tradeswomen who can do the work of this domestic manufacturing,” said Sinema. “That’s an area where we have an opportunity to grow, not just here in Arizona but across our nation. To meet this need so we can retain our global independence and competitiveness.”

Chips: “Arizona is already a hub for the microchip and the semiconductor industry; but passing the CHIPS Plus legislation will allow us to triple or even quadruple that investment,” said Sinema. “It’s incredibly important for us—not just for the tax credit and the investment in R&D—but for the tech hubs, for the investment in science, and to help attract more companies to build semiconductors right here in Arizona.”

The last word: “Manufacturing is the bread and butter of our state,” said Sinema. “It ensures that Arizona is a hub to the nation and the entire world in making products that will power our economy for the future.”

Read more: Check out the local coverage of the senator’s visit from the Daily Independent and the Phoenix Business Journal (subscription).

Practical Insights

Manufacturers: Legislation Is a Bold, Important Step Toward Ramping Up the Domestic Manufacturing of Essential Inputs

Timmons: Every manufacturer will benefit. But there is more to be done.

Washington, D.C. Following the House’s passage of the CHIPS-Plus Act, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“This legislation is a bold, important step toward ramping up the domestic manufacturing of essential inputs used by virtually every part of our industry. Every vote for the CHIPS-Plus Act was a vote for a more competitive manufacturing industry in America. This bipartisan legislation shows that Congress is taking the problems of supply chain disruptions and inflation seriously. Every manufacturer will benefit. But there is more to be done.

“Once President Biden signs it into law, manufacturers will work with lawmakers to build on the momentum and continue our advocacy for important measures that did not make it into the final CHIPS-Plus legislation, including trade measures, anti-counterfeiting protections and other workforce development priorities.

“But if lawmakers are truly serious about competing with China, they will now oppose the tax increases and attacks on pharmaceutical innovation in the latest reconciliation bill proposal, which will certainly lead to continued inflationary pressures. Congress should stay focused on bipartisan solutions, not legislation that weakens our economy and makes us less competitive with other countries.”

-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: 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: CHIPS-Plus Act Will Deliver a Powerful Boost to Manufacturers’ Competitiveness

Timmons: It’s encouraging to see this Congress once again come together in a bipartisan way to make critical investments in our industry’s competitive

Washington, D.C. Following the Senate’s passage of the CHIPS-Plus Act, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“The CHIPS-Plus Act will deliver a powerful boost to manufacturers’ competitiveness. Manufacturers across all sectors rely on access to chips, so this bill will help strengthen American supply chains thanks to its investments in domestic semiconductor production—as well as its funding for programs to support the STEM workforce, advanced technology development, excavation of critical minerals, clean energy and more. Manufacturers have worked with lawmakers for more than a year to advance many provisions of this bill, and we urge the House to pass it as quickly as possible and get it to President Biden’s desk.

“CHIPS-Plus should only be the beginning, however. We will continue advocating policies needed to beat back economic headwinds such as inflation and supply chain disruption. And we will work with Congress to move quickly on policies from the U.S. Innovation and Competition Act and the America COMPETES Act that were left out of CHIPS-Plus, such as anti-counterfeiting measures, important trade provisions and further investments in supply chain resilience and workforce development.

“It’s encouraging to see this Congress once again come together in a bipartisan way to make critical investments in our industry’s competitiveness and our country’s future. Manufacturers look forward to building on this progress. This and future China competition legislation will help us to innovate, create jobs, expand domestic operations and grow the U.S. economy for years to come.”

-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

NAM Launches Six-Figure Television Ad Campaign Opposing Reconciliation

NAM Urges Senate to Vote “No” on Government Price Controls That Harm Manufacturers

Washington, D.C. – The National Association of Manufacturers has launched a six-figure broadcast and cable television advertising campaign ahead of a potential reconciliation bill that threatens manufacturing innovation and competitiveness. The campaign calls on senators to oppose government price controls that would undermine the development of lifesaving medicines and the livelihoods of manufacturing workers across America who deliver them.

“Government price-setting schemes that undermine our ongoing work to develop lifesaving cures to diseases like cancer and Alzheimer’s and respond to health crises are never the answer,” said NAM President and CEO Jay Timmons. “At a time when manufacturers are already facing extraordinary economic pressures, the Senate should be focused on bolstering our industry’s competitiveness, not undermining it. We are calling on senators to vote ‘no’ on reconciliation and stand with manufacturers and the hardworking Americans who are integral to battling this pandemic and discovering future cures.”

To view the latest television ad, click 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 12.8 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.

Regulatory and Legal Reform

Manufacturers Sue SEC on Proxy Rule Rescission

“The SEC has failed to provide any substantive justification for its dramatic about-face”

Washington, D.C. – The National Association of Manufacturers filed a lawsuit in federal court today challenging the Securities and Exchange Commission’s rescission of critical components of its 2020 rule on proxy advisory firms. Following the submission, NAM Chief Legal Officer Linda Kelly released the following statement:

“The SEC has failed to provide any substantive justification for its dramatic about-face. 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. The NAM Legal Center is filing suit to preserve the 2020 rule in full and protect manufacturers from proxy advisory firms’ outsized influence.”

Background:

The NAM has long called for increased oversight of proxy advisory firms. In July 2020, the SEC issued final regulations to enhance transparency and accountability for proxy firms, a move NAM President and CEO Jay Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.” In October 2020, the NAM filed a motion to intervene in ISS v. SEC (ISS’s attempt to overturn the rule) in support of these reforms. A summary judgment hearing in ISS v. SEC is scheduled for July 29, 2022.

In June 2021, the SEC announced that it was suspending enforcement of the 2020 rule; the NAM voiced concern about the agency’s “efforts to bypass the required notice-and-comment process to keep this lawfully issued rule on ice indefinitely.” The NAM later filed suit against the SEC in October 2021 challenging this unlawful suspension. The Western District of Texas held a summary judgment hearing in NAM v. SEC on May 25, 2022; we await the court’s opinion.

In November 2021, the SEC proposed to rescind critical portions of the 2020 rule, a proposal the NAM called “deeply troubling.” The SEC finalized its rescission rule in July 2022, a move that Timmons said “epitomizes ‘arbitrary and capricious’ rulemaking.”

-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 Urge Reversal of Mexico’s Unfair Energy Policies

Washington, D.C. – Following the Office of the U.S. Trade Representative’s announcement that the U.S. has requested consultations under the U.S.–Mexico–Canada Agreement over Mexico’s energy policies, National Association of Manufacturers Vice President of International Economic Affairs Ken Monahan released the following statement:

“This bold action from the Biden administration and Ambassador Katherine Tai is critical to stemming measures implemented and proposed by the government of Mexico that contradict the letter and spirit of the USMCA and undermine the rule of law in Mexico.

“Energy and electric power generation measures implemented by Mexico have favored dramatically the interests of Mexico’s state-owned electrical utility and state-owned oil and gas company. This adds costs for manufacturers that rely on existing contracts with energy suppliers and makes it harder for them to meet long-term sustainability goals in Mexico, while also slowing the deployment of renewable energy in Mexico.

“Manufacturers welcome the news that the U.S. has requested dispute settlement consultations with Mexico under the USMCA. We stand ready to work with USTR to quickly reverse Mexico’s unfair energy policies and to address the many other industry challenges in Mexico.”

Background:

On June 30, NAM President and CEO Jay Timmons detailed for President Biden a wide range of market access, regulatory and other commercial challenges in Mexico faced by manufacturers. Timmons underscored that “failure to prioritize enforcement of these commercial challenges will undermine the long-term credibility of the USMCA.”

-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 Back Chips Bill, Call for Further Action from Congress

Timmons: “A vote for the CHIPS Act funding is a vote for a stronger, more competitive manufacturing industry in America.”

Washington, D.C. – Ahead of consideration of legislation to bolster U.S. semiconductor manufacturing, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“A vote for the CHIPS Act funding is a vote for a stronger, more competitive manufacturing industry in America. But if Congress fails to pass this investment in the coming days, they will hand other countries a competitive advantage and weaken our own economy at a precarious moment.

“Other provisions of the China competition bill still under negotiation also need to make it to the president’s desk, and manufacturers firmly support their inclusion in this package. We will continue our advocacy for the anti-counterfeiting measures, trade provisions, supply chain investments and more. Congress must get those done.

“This week, we can take a powerful step forward with chips funding and move toward a future where semiconductor shortages—and the disruptions they’ve created—are a thing of the past. Other nations are not waiting around to ramp up semiconductor manufacturing. America should be leading, not falling behind.”

Background:

According to the NAM’s latest Manufacturers’ Outlook Survey, more than 88% of respondents said it was important for the federal government to take steps to support the domestic manufacturing sector in the face of increased global competition for industrial investment, with nearly 58% saying “very important” and 30.7% saying “somewhat important.” When asked about what aspects of the China competition legislation were most important for supporting manufacturing activity, the top choices were addressing port congestion and competition issues in ocean shipping (70.9%), eliminating ill-conceived labor provisions that facilitate unionization campaigns (61.3%), strengthening U.S. leadership in energy innovation and competitiveness (58.2%), funding to increase domestic semiconductor production capacity (57.9%), investments to support the critical minerals supply chain (55.7%) and ensuring the tax code provides a full deduction for research expenses (48.3%), among others.

-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

SEC Proposes New Shareholder Rule

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The U.S. Securities and Exchange Commission has proposed a new rule that could undermine key reforms the NAM secured in 2020—and empower activist shareholders.

The background: Shareholders in public companies generally have the right to submit proposals to corporate proxy ballots.

  • These proposals, which voice shareholders’ views on business and governance topics relevant to the company, can then receive a vote by the full shareholder base.
  • To qualify for inclusion on the ballot, shareholder proposals must meet certain criteria.

Submission thresholds: In 2020, the NAM supported—and the SEC finalized—new thresholds to make it more difficult for activist shareholders to place politically motivated proposals on the proxy ballot.

  • These thresholds require higher degrees of ownership and shareholder support before a proposal can be submitted or resubmitted.

The new rule: The SEC’s proposal leaves the 2020 thresholds in place, but it creates other opportunities for activists and limits the tools companies can use to prevent them from hijacking the proxy ballot.

  • Currently, companies can exclude shareholder proposals that have already been substantially implemented, are duplicative of other proposals on the proxy ballot or are resubmissions of previous failed proposals. Each of these abilities would be limited significantly under the proposed rule.
  • For example, rather than being allowed to exclude all duplicative proposals, companies would only be permitted to exclude virtually identical proposals that address the same subject matter, seek the same objective and do so by the same means.

What we’re saying: “The NAM is concerned that the SEC’s proposed rule may prioritize the agendas of activists over the needs of long-term shareholders investing for the future,” said NAM Senior Director of Tax and Domestic Economic Policy Charles Crain.

  • “We look forward to working with the SEC in the coming months to ensure that manufacturers’ shareholder engagement can continue to focus on issues critical to business growth and investor returns.”

Next steps: Comments on the proposed rule are due to the SEC by Sept. 12.

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