Senate Finance Committee Chairman Max Baucus (D-MT) today outlined what he called his four goals for tax reform: jobs from broad-based growth; competitiveness; innovation; and, opportunity. These are goals Manufactures share. NAM has long been calling for comprehensive tax reform that will ensure that our tax code is no longer an impediment to business and success, and one that is a far cry from the byzantine, labyrinth that is our tax code today.
Like Chairman Baucus, the NAM believes the code should be modernized, simplified and more stable. Today too many provisions regularly need to be extended. What’s more, in today’s global economy, the U.S. must have a tax code that includes a globally competitive corporate tax rate of 25% or lower and which recognizes that some products must be produced outside of the U.S. to serve the 95% of consumers that do not live within our borders. In order to ensure that American companies remain competitive we need a territorial system of taxation that encourages companies to bring foreign income back to the U.S. Additionally, we need a permanent, expanded and simplified R&D Credit to, as Chairman Baucus noted, “bolster… innovation. Innovative companies create jobs.”
One item that the Chairman didn’t address specifically but is a key goal for the NAM in tax reform is permanent lower rates for individuals – nearly 70 percent of manufacturers operate as “flow-through” busiensses with the owners paying business taxes through their individual tax returns. We would be greatly remiss to not recognize the impact of these manufacturers in the context of comprehensive tax reform.
As the Chairman said, “tax reform is a once-in-a-generation opportunity. We can cement America’s preeminence.” Manufacturers wholeheartedly agree that the right kind of tax reform can do just that and we look forward to continuing to work with the Senate Finance Committee and the House Ways and Means Committee as they continue to lay the groundwork for this effort.
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