As part of its budget, the Biden administration proposed earlier this year to end a tax provision that helps keep intellectual property in the United States—and the NAM is advocating against the move.
The background: The foreign-derived intangible income (FDII) deduction was created as part of the Tax Cuts and Jobs Act of 2017. It is intended to encourage companies to develop and maintain intellectual property in the United States, as well as bring it back to the country, by providing a lower tax rate for foreign sales based on U.S. IP.
Why it matters: By incentivizing the location of IP in the U.S., FDII ultimately helps support high-paying manufacturing jobs—because IP leads to the development of new products. Moreover, data from the Bureau of Economic Analysis shows that the amount of IP coming to the U.S. increased significantly after passage of the 2017 tax reform law.
The global angle: Other countries, including U.S. competitors, have policies in place to encourage companies to locate their IP in their own nations. If the U.S. scraps FDII, other countries might pull ahead.
What we’re saying: “This important provision is working as intended to support the people who create things in America,” according to NAM Senior Director of Tax Policy David Eiselsberg. “Keeping FDII in place is key to supporting U.S. innovation, job growth and competitiveness.”
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.
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