Recent reports that the European Union is working on legislation to require global companies to publically disclose tax and other financial information is raising red flags for U.S. manufacturers that operate in European countries. The latest information disclosure proposal—coming on the heels of the new information requirements in the Base Erosion and Profit Shifting (BEPS) plan finalized late last year by the Organisation for Economic Co-operation and Development (OECD)— would impose additional compliance costs on companies and force disclosure of sensitive taxpayer information, creating a whole new set of unnecessary business challenges for global companies. Read More
The disclosure burden facing public companies is already overwhelming. For example, corporate proxy statements for annual meetings now average between 60 and 80 pages, up from 30 pages a decade ago.
Companies are required to disclose everything from financial performance to executive compensation in these statements, thanks in large part to the Dodd-Frank Act enacted in 2010. The NAM submitted comments to the SEC last year on three of these new disclosures: the “pay ratio” rule and the proposed “pay versus performance” and “clawback” rules. Each proposal is expected to create additional costs and burdens for public manufacturing companies and add to the length of proxy statements without providing any significant benefit to shareholders. Read More
As strong and vocal advocates for comprehensive tax reform that includes lower corporate tax rates and a modern, territorial tax system, manufacturers applaud the Alliance for Competitive Taxation (ACT) for busting some often repeated “myths” about corporate taxes. ACT’s Tax Facts—released today—corrects the record on some of the misconceptions, misstatements and outright falsehoods that the NAM has been pushing back against for years. Here are some of our favorites: Read More
In comments on January 28th, House Ways and Means Committee Chairman Kevin Brady (R-TX) said that the European Commission’s latest efforts to implement recommendations in the Organisation for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) project will make it even harder for U.S. companies to compete in the global marketplace. This is a serious concern for manufacturers and an issue the NAM has raised numerous times with the media, the Administration and Capitol Hill. Read More
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.
Late last month, the NAM sent a letter to Rep. Charles Boustany (R-LA), a member of the House Ways and Means Committee, endorsing legislation (H.R. 4297) he recently introduced. The aptly named Bad Exchange Prevention (BEPS) Act addresses some of manufacturers’ concerns with the recommendations in the Base Erosion and Profit Shifting (BEPS) project spearheaded by the G-20 and the Organisation for Economic Co-operation and Development.
Yesterday’s Wall Street Journal op-ed by Douglas Holtz-Eakin at American Action Forum raises some of the same concerns we’ve been hearing from our members about the BEPS recommendations from the Organization for Economic Co-operation and Development aimed at curbing tax avoidance and international profit shifting.
As promised, Treasury yesterday released proposed regulations to implement new country by country reporting requirements included in recommendations on Base Erosion and Profit Shifting (BEPS) approved this fall by the G-20 and the Organisation for Economic Cooperation and Development (OECD).
While the requirement to file country by country reports (CbCRs) on a company’s global financial and tax data impose an additional administrative burden on companies, the proposed guidance makes clear that the reports will be submitted by Treasury to foreign countries under bilateral treaties and information exchange agreements with protections to ensure confidentiality, consistency and appropriate use of the information by foreign countries. The proposed guidance—which covers who has to file the reports and what information is required—also reiterates Treasury’s position that it will suspend the information exchange if a country fails to abide by these conditions.
Manufacturers use derivatives to hedge everyday business risks stemming from fluctuations in commodity prices, currency and interest rates. When Congress enacted the financial reform bill (the Dodd-Frank Act) in 2010, they included a provision to exempt manufacturers and other derivatives “end-users” from central clearing requirements, recognizing that end-users do not pose a threat to the financial system and should not be unnecessarily burdened. Read More
Since it was first enacted in 1981, the research and development tax credit has never been a permanent part of the tax code. Instead, the temporary nature of the credit — a characteristic shared by more than fifty other “tax extenders” — has injected uncertainty into business planning for years since it is constantly expiring and often not extended until months later. The good news is that this on-again, off-again debacle could finally be alleviated for good, if Congress approves a historic tax agreement called the Protecting Americans from Tax Hikes (PATH Act).