Healthcare costs are constantly on the minds of manufacturers. Almost three fourths of the companies responding to a recent NAM survey said rising healthcare insurance costs are a primary business challenge for them. So we’re glad to see that these concerns are resonating in Congress where House Small Business Health and Technology Subcommittee Chair Chris Collins (R-NY) today held a hearing to take a look at the impact on small businesses of the new fee on health insurance fee, set to kick in next year.

The fee, which was included in the healthcare reform law, will raise some $100 billion from health insurance providers over the next ten years. And since many small businesses obtain their employees’ health care coverage from these insurance companies, these additional fees are likely to be felt in premium costs. Indeed, the fee could raise the cost of employer-sponsored insurance by 2 to 3 percent in 2014, imposing a cost of nearly $5,000 per family by 2020 according to a study released earlier this year by the National Federation of Independent Business Research Foundation.

Fortunately, Congress still has an opportunity to avert this crisis before it starts. On the House side, Rep. Charles Boustany has introduced bipartisan legislation –H.R. 763 — to repeal this annual fee on health insurers and a similar bill — S.603—has been introduced in the Senate by  Sen. John Barrasso (R-WY). Manufacturers urge lawmakers to repeal this job killing tax ASAP.

Employers and consumers are set to face higher health costs due to the Affordable Care Act’s tax on health insurance plans, according a recent analysis by Milliman. Contrary to the stated goals of the law to reduce health care costs, the tax alone will cause premiums to increase by as much as 2.4 percent in 2014, reaching as high as 2.9% in later years. According to the study authors, the effective result is a tax on both consumers and employers.

Not only will the health insurance tax cause employers’ and consumers’ health care costs to rise, it will also stifle job creation. The National Federation of Independent Business projects that the increased cost of employer-sponsored health insurance from the will reduce private sector employment by as much as 249,000 jobs by 2021, and reduce real GDP by up to $36 billion. Small businesses are projected to incur nearly 59% of the job losses directly associated with the tax.

Manufacturers support efforts in Congress to repeal provisions of the Affordable Care Act, such as the health insurance tax, to help make health coverage more affordable. In this case, doing so would have the added benefit of preventing job losses in an already difficult economic environment.

Dorothy Coleman is vice president of tax and domestic economic policy, National Association of Manufacturers.

At first blush, Manufacturers were somewhat optimistic about the framework for business tax reform the President laid out today in the fiscal 2014 budget plan he sent to the Hill. While NAM is firmly behind comprehensive, that is business and individual, tax reform, we thought maybe the President’s plan for business tax reform could help jump start a broader debate.  And frankly, it’s hard for manufacturers to criticize most of the broad tax reform goals the President laid out: eliminate loopholes, broaden the base and cut the corporate tax rate; strengthen manufacturing and innovation; strengthen the international tax system; simplify and cut taxes for small businesses; and restore fiscal responsibility and not add to the deficit. And when we looked at more specifics of the budget, we were pleased to see that at least two provisions important to manufacturers—a strengthened and permanent R&D credit and permanent expensing for small businesses were part of the plan. Unfortunately, the good news ends here.

Let’s turn to the Administration’s goal to “strengthen international tax rules.”  We’re embarrassed that we thought “strengthen” meant improving our outdated worldwide system.  We were wrong. The President’s idea of strengthening means imposing some $157 billion in new taxes on American worldwide companies, actually making our uncompetitive, antiquated system worse than it is. That’s certainly not going to help U.S. manufacturers or any U.S. company struggling to compete in a global marketplace. Nor will manufacturing be strengthened by imposing some $44 billion in new taxes on energy companies. Manufacturers use about 1/3 of our nation’s energy.  New taxes on energy producers will increase energy costs for consumers and discourage the type of investments in new sources of energy in recent years that have been a “game changer” for manufacturers and other energy consumers.

We also were confused that cutting taxes for small businesses is an element of the President’s tax reform framework since the budget itself includes a slew of tax increases targeted to individual taxpayers that also will hit many of the almost two-thirds of manufacturers that operate as “S corps” or other ”flow through” entities. And how do you explain to the many family-owned small businesses—including a number of manufacturers— that their hard-won permanent estate tax relief signed into law by the President in January now is temporary. Five years from now the estate tax rate will go up and the exemption will go down.  That’s the kind of change that not only results in a higher tax bill but also higher planning costs and more uncertainty.

Frankly, we’re also puzzled with the number of new tax incentives included in the budget plan given that “broaden the base” tops the list of priorities in the President’s tax reform framework.  Manufacturers know firsthand how difficult it is going to be to agree on base broadeners. Adding more to the mix will only make that effort more difficult. And while we’re on base broadening, we’re concerned that the President identifies roughly $300 billion “revenue changes and loophole closers” either as part of the reserve for revenue neutral business tax reform or to offset other parts of his budget. This creates winners and losers before we even begin the debate on tax reform. And more importantly, and as we’ve said many times before, piece-meal changes or repeal of long-standing rules outside of tax reform will inject more uncertainty into business planning, making U.S companies even less competitive and threaten economic growth and U.S. jobs.

Manufacturers were surprised this morning by the front-page story in the Washington Post that calls into question the tax burden faced by U.S. global corporations, including manufacturers. As the Post article accurately points out, the “tax expense” figures on which they base the story are not the same as taxes paid to the IRS. And, despite admitting that “it is nearly impossible to figure out the amount companies are actually paying [in taxes],” the take away from the article is the misconception that American companies are not paying enough.

First, let’s set the record straight. U.S. manufacturers comply with tax laws and pay their fair share of taxes. Indeed, at 35 percent, the United States has the highest corporate statutory tax rate among developed countries.  And that high tax rate does effect a businesses’ investment and business decisions.  Admittedly, the U.S. statutory corporate tax rate doesn’t tell the complete story. The effective tax rate reflects deductions and credits included in the tax code that can reduce a company’s tax liability. According to our friends at the Tax Foundation, the most recent studies show that the average effective corporate tax rate for corporations headquartered in the U.S. at roughly 27 percent, is still higher than our competitors in other countries that face an average effective tax rate of about 20 percent. And there’s more. The effective average rate for new investment in the U.S. is roughly 29.8 percent, 7.4 point above worldwide competition.

And while we’re at it, we’d like to challenge the unnamed “experts” cited in the story who claim that the U.S. code has encouraged companies to shift their income overseas.  Here’s how we see it.  Current U.S. tax laws make it difficult for U.S. companies with worldwide operations to thrive and compete in the global marketplace. In contrast to our competitors, the U.S. system taxes income regardless of where it is earned. As a result, U.S. global companies generally have a higher tax burden than non-U.S. companies — a significant disadvantage when competing for business in a global marketplace.  Manufacturers know firsthand that if U.S. companies can’t compete abroad, where 95 percent of the world’s consumers are located, the U.S. economy suffers from the loss of both foreign markets and domestic jobs that support foreign operations. Thus, in order to make U.S. multinationals more competitive, the NAM supports moving from the United States’ current worldwide tax system to a territorial tax system similar to systems in most industrialized countries.

Finally, we’re proud to say that the NAM is actively involved in the current debate on tax reform but not,  as the Post would have it  to “protect client interests.” Rather, Manufacturers’ goal is to secure a tax climate that encourages competitiveness and economic growth and  that benefits all businesses and families in the United States.

We’ve already said it but it bears repeating, the NAM appreciates the Senate’s advancing a budget plan for fiscal year 2014 (S.Con.Res.8). Manufacturers are concerned about the historically-high levels of the federal deficit and its impact on the national debt on manufacturing and the overall U.S. economy. We need a budget that marks a path to reduce the federal debt and deficits, focusing both on real and immediate spending cuts and longer term structural changes to our nation’s entitlement programs. We support comprehensive tax reform to promote economic growth and U.S. competitiveness. Unfortunately, the S.Con.Res 8 doesn’t accomplish these goals. However, the vote-a-rama that’s going on now, gives Senators a chance to support amendments that would improve the Senate budget and reject those amendments that would make the plan even more anti-growth and anti-manufacturing.

It’s no secret: our current tax system is broken and  discourages economic growth and U.S. competitiveness. That’s why comprehensive, revenue neutral tax reform is critical to our nation’s economic future. But, the S.Con.Res8 doesn’t include tax reform. Instead it proposes a $1 trillion tax increase. That’s why we support amendments to eliminate this jaw-dropping tax increase and support allowing Congress to advance pro-growth, revenue-neutral tax reform that would spur job creation and investment. Last night we informed the Senate that votes on an amendment by Sens. Grassley and McConnell seeking to strike the $1 trillion tax increase and replace it with a deficit neutral reserve fund for revenue neutral tax reform might be considered as “NAM Key Vote” for 2013. While the amendment failed, the fight is not over. We support Sen. Cornyn’s amendment requiring a supermajority of the Senate to increase tax rates on businesses and individuals.

Manufacturers lead in a lot of areas including in providing quality retirement benefits to their employees. We support amendments Sen. Burr’s amendments to protect these benefits from being a source of revenue for additional government spending. As the world’s leading innovators we strongly support Sen. Hatch’s amendment to preserve and make permanent the R&D tax credit—long been a priority for the NAM.

Many small and medium size manufacturers (SMMs) are family-owned businesses and that’s why we support Sen. Thune’s amendment that will allow for the full and permanent repeal of the estate tax.

We also oppose amendments that will make us even less competitive – amendments that seek tax increases on U.S. global companies. 95% of the world’s consumers live outside of the U.S. and yet U.S. tax laws make it difficult for U.S. companies with worldwide operations to thrive and compete in the global marketplace. To make U.S. multinationals more competitive, the NAM supports the adoption of a competitive territorial tax system as part of a comprehensive tax reform that also lowers the corporate tax rate and reduces rates for the SMMs that pay taxes through the individual tax code.

Speaking of increasing taxes, we support an amendment to repeal the Health Insurance Tax (HIT) included in ACA filed by Sen. Barrasso. This new tax—to be levied on health insurance companies beginning in 2014—will have the unintended result of increasing costs for many SMMs that provide health care benefits for their employees.

Finally, we support Sen. Coats’ amendment that would repeal the 3.8 percent investment income surtax also included in ACA and now in effect. When added to tax increases in the fiscal cliff deal, some taxpayers now pay nearly 50 percent more in taxes on these investments than they did last year. Increasing the tax on savings and investment reduces the amount of capital business owners have available to invest in their companies and we fear that this tax will ultimately result in the loss of vital funds needed for business operations and job creation and for that reason we support the amendment.

There was a welcomed flash of bipartisanship last night on the Senate floor during the on-going debate on a fiscal 2014 budget plan as more than three-fourths of the Senators voted to repeal the new excise tax on medical devices.  The bipartisan amendment offered by Senators Hatch and Klobuchar would repeal the onerous 2.3 percent excise tax , which went into effect on January 1st, as part of the Affordable Care Act. The tax impacts medical device manufacturers of all sizes, including start-up companies that often are on the cutting-edge of developing new products. By increasing the costs of medical devices, the excise tax hurts the device manufacturers and their workers and also stifle the research and innovation that leads to the development of medical products that contribute to the health and well-being of all Americans. The additional costs imposed by the tax will make it more difficult for U.S. medical device manufacturers to compete in the global marketplace and threaten U.S. jobs, investment and our nation’s leadership in life sciences. We certainly appreciate the broad support for repeal in the Senate and strongly encourage policy makers to move ASAP to send a bill to the White House that gets rid of this ill-conceived tax. All Americans will benefit!

Manufacturers appreciated the highlight of the industry from the President last night. And, as long-time advocates for pro-growth tax reform, we were glad to hear the President calling for “comprehensive” reform, that is an effort that includes both corporate and individual tax reform.

While many larger manufacturers operate in corporate firm, about two-thirds of manufacturers—mostly small and medium-size companies—operate as a “flow through” and are taxed as individuals. Unfortunately, the good news on taxes stopped there.

The President made clear that he looks at tax reform as a way to help “bring down the deficit.”  The NAM, on the other hand, doesn’t view tax reform as a revenue raiser, but as an engine for much-needed economic growth and competitiveness.

Speaking of competitiveness, we were dismayed to hear the Administration again bring up the illusory “tax breaks for companies to ship jobs overseas.” Manufacturers in the United States know firsthand the challenges of competing in a global marketplace under our outdated world-wide tax system.  Making the current system worse—as the President suggested—is going to make manufacturers in America even less competitive. In order to promote competitiveness, we need to move to a territorial tax system, similar to systems in most industrial countries, structured to enhance U.S. competitiveness, not raise additional revenue.

Dorothy Coleman is vice president of  tax and domestic economic policy, National Association of Manufacturers.

For more than a year, manufacturers have been telling policy makers that the pending sequester, now set for March 1st, will impair our national security and cripple a vital part of the manufacturing sector. This morning at Georgetown University, Defense Secretary Leon Panetta delivered the same message, and laid out the true national security ramifications.

On the need to maintain the defense industrial base, he told the audience, “The last damn thing we need, if we face a crisis, is to have to contract out that responsibility to another country.” As the deadline fasts approaches for the across-the-board cuts to kick in, we strongly urge Congress and the Administration to work together to replace the sequester with less damaging cuts in federal spending and not job-killing tax increases.

Manufacturers supported the Budget Control Act of 2011 that, among other things, included some $917 billion in spending cuts and set up a “Super Committee” to find an additional $1.2 trillion to $1.5 trillion of deficit reduction. If the Super Committee failed, as it did, the penalty was a “sequester,”  $1.2 trillion in across-the-board spending cuts divided between defense and nondefense spending. NAM members feel strongly that we need to get our nation’s fiscal house in order and get government spending under control but we oppose the “chain saw” approach of the sequester. Arbitrarily cutting federal programs, particularly in the defense area, threatens jobs, national security and the economy.

As a result, we’ve urged lawmakers to abandon the “across-the-board” approach and instead take a critical and deliberative look at cutting government spending with a focus on entitlement reforms and potential cuts in discretionary spending, keeping in mind the impact spending cuts will have on our economic and national security. In short, we have a spending problem and the focus should be on spending cuts. 

So we’re surprised at recent proposals from Congressional Democrats and today, President Obama, who want to replace the sequester with a mix of spending cuts and tax increases.  As the NAM and many other groups have pointed out, the sequester will cost U.S. jobs and economic growth.  And tax increases will do the same.

Replacing the sequester with tax hikes is substituting one bad idea for another.  Rather, let’s use this opportunity to begin a much needed and very important debate on actually cutting federal spending.

The headline of the New York Times Feb. 3 editorial, “A Million Jobs at Stake,” caught the attention of Manufacturers who’ve been warning Congress and the Administration of the potential job-killing impact of the sequestration now set to kick in on March 1st. Indeed, we agree with the Times that the sequester was never supposed to happen and that allowing it to kick in will hurt our struggling economy. But we strongly disagree that the solution to avoid sequestration is tax increases, particularly those directed a specific industries or tax payers. Yes we need to cut federal spending, but imposing new tax increases or arbitrarily lopping off some spending is not the way to go.

Rather, we believe strongly that the solution is thoughtful reductions in federal spending—particularly entitlement spending. As NAM Board member Della Williams so aptly told the House Armed Services Committee last summer, “sequestration is cosmetic surgery with a chainsaw.” There’s no way to avoid it: policy makers need to take a hard look at all federal spending—including entitlement spending with an eye to avoiding unintended and damaging impacts. Clearly our nation’s fiscal challenges are of critical importance not only to the future of American manufacturers but to the future of all Americans. Any plan to address these our fiscal problems will have a long-lasting and significant impact on our economy.  We urge policy makers not to take the “easy way out” and let the sequester “happen” but to use this opportunity to tackle our real fiscal challenges.