Earlier today, the National Association of Manufacturers (NAM) released the results of its second quarter 2016 Manufacturers’ Outlook Survey, showing an uptick in overall sentiment. In this survey, 61.7 percent of manufacturers expressed positivity about their own company’s outlook, up from 56.6 percent in March. This marks the most optimistic manufacturers have been since December 2015.
However, NAM Chief Economist Chad Moutray said, “While this survey offers a bit of optimism for manufacturers, there is still a dramatic need for improvement before our sector can regain its footing. This survey, coupled with the latest jobs report, should serve as a stark reminder to Congress that policy priorities, including market-opening trade agreements and comprehensive tax reform as well as addressing regulatory barriers, are top of manufacturers’ minds. If lawmakers in Washington take action on these and other items, they could help reverse the pain manufacturers are experiencing, expanding job opportunities and strengthening the broader economy as a result.” Read More
Manufacturers applaud Sen. Rob Portman’s (R-OH) leadership in introducing legislation to roll back recent aggressive IRS audit practices. The bill, S. 2809, would prevent the IRS from denying cooperative taxpayers access to the IRS Appeals Office in order to seek an independent review of the examination. In addition, the bill would limit the use of designated summonses to cases where a taxpayer is not cooperating with the IRS. The bill also would prevent the IRS from unilaterally extending the statute of limitations on an audit. Finally, manufacturers are pleased that the legislation would prevent the IRS from hiring outside law firms to assist in an audit and investigation of a corporate taxpayer. This practice has already been questioned by at least one court. Beyond the concerns about potential conflicts of interest that this practice raises, the fact that the IRS would outsource this inherently governmental function and expose confidential tax information to an outside entity is a real concern to manufacturers. The NAM urges Congress to take up this bill and put an end to these abuses once and for all.
Manufacturers continue to hope this year’s State of the Union speech, to be delivered by President Obama tomorrow night, will include a 2016 resolution to what would finally be a demonstrated commitment on the kind of comprehensive tax reform that will result in a pro-growth, competitive tax code.
We’re told that the president plans to deliver an optimistic outlook on the improvements over the past seven years of his administration, highlighting “the road traveled the past seven years…to recover from crisis.” It’s hard for many to be optimistic about the economy even now, over six years after the official end of the “great recession.” In fact, while there are certainly success stories, global headwinds continue to buffet our economy and manufacturing in particular.
The president’s preview video says that he will also talk about the things that need to be done in the future. So, what can Washington do to help turn around this trend? High on manufacturers’ list has long been enactment of comprehensive tax reform, one that would return the United States to a competitive position versus our international peers.
Last January, the NAM released a study, titled A Missed Opportunity, which laid out the economic cost of delayed tax reform. This study detailed the benefits to be had from enactment of pro-growth comprehensive tax reform that reduces the corporate tax rate to 25 percent or less, shifts to a competitive international tax system, a permanent R&D incentive, robust cost-recovery provisions and lower rates for pass-through businesses.
In sum, we found that implementation of tax reform with these provisions would, over 10 years, contribute more than $12 trillion in GDP, increase investment by $3.3 trillion and add more than 6.5 million jobs to the U.S. economy. That these provisions are elemental for a pro-growth tax reform is not revolutionary. Even still, comprehensive tax reform continues to be a future goal.
However, since the theme is optimism, we will remain optimistic that progress will be made and that the need for comprehensive tax reform will move from a resolution for “the future” and become a resolution for now.
Learn more about the NAM’s tax reform priorities by clicking here.
As the saying goes, there’s good news and bad news. Last week’s overall jobs numbers were generally viewed as good news for the overall economy and the labor market. However, as the NAM’s Chief Economist, Chad Moutray, describes it, “One of the larger exceptions to that is manufacturing, which continues to struggle. The sector lost 1,000 employees in November, with zero growth on net since January. Manufacturers remain mired by global headwinds and lower commodity prices. These challenges have dampened demand and production for manufacturers, and as a result, hiring has slowed to a standstill.” Read More
This week, the NAM joined a number of other business associations representing a wide swath of the economy in a letter calling on the IRS to reconsider regulations under Section 7602 of the IRC code that allows the IRS to hire outside attorneys to carry out taxpayer examinations, including taking testimony and reviewing books, papers and testimony produced in compliance with subpoenas. In sum, these associations are urging the IRS to stop allowing outside firms to carry out the governmental functions that should properly … all of which are functions that are inherently governmental. Read More
To invest or not to invest, that’s the question on the mind of businesses large and small all across the country. What’s holding them back? Well there are lots of reasons, the economy, the season, their future growth expectations and tax policy to name a few. Most of these reasons make sense. A business owner must think about the investment and decide if it’s an expenditure worth making, a risk worth taking. What’s not reasonable though is that tax policy is one of these questions. Read More
Owens-Illinois (O-I) is an iconic American manufacturer. Founded in 1903 by Michael Owens who invented the automatic bottle-making machine, O-I has been churning out glass bottles for more than 100 years. This company with over 21,000 employees worldwide make the bottles used by thousands of manufacturers and millions of consumers each year. However, even after all of these years, O-I needs to continually innovate in order to grow. Read More
All week we’ve been telling the story of how the expiration of critical pro-investment tax policies — including enhanced Sec. 179 expensing, 50 percent first year expensing (aka bonus depreciation) and the comparable provision allowing the accelerated use of AMT credits in lieu of bonus depreciation – effects manufacturers large and small. Read More
A letter on the website for Cleveland’s Tendon Manufacturing Inc., from owner Mike Gordon states what Tendon’s customers have long known, “some things never change; our focus continues to be, to provide excellent service, competitive pricing and quality products to our customers.” Another thing that doesn’t change is Gordon’s strong support for an extension of enhanced Section 179 expensing that would allow him to up his investment in his company. Read More