Category

Taxation

NAM Leadership Goes on Tax Reform Roadshow in Key States

By | Communications, Events, Shopfloor Policy, Taxation | No Comments

The National Association of Manufacturers (NAM) is all in on tax reform. The legislative framework unveiled by the “Big Six” presents a tremendous opportunity for America’s manufacturers to grow, hire new workers and increase wages and benefits. Following robust engagement at the national level, capped by hosting President Donald Trump for a major address on tax reform at our board meeting and joining the president for an Oval Office proclamation signing on National Manufacturing Day, the NAM’s leadership hit the road this week to make the case for tax reform in key manufacturing states. As NAM President and CEO Jay Timmons told National Journal for its Q&A feature this week, “We’re going to make sure manufacturing workers know how important [tax reform] is to their own livelihood back in their districts.”

That effort began in earnest on Tuesday with a forum at the City Club of Chicago, where Timmons and Illinois Manufacturers’ Association President and CEO Greg Baise discussed the importance of passing tax reform with local business leaders. Timmons also traveled to Milwaukee, where he led a panel focused on tax reform with local business leaders and gave an interview to the Milwaukee Journal Sentinel:

“… [T]he tax code desperately needs an overhaul, Timmons said in an interview. ‘I am really optimistic about getting tax reform yet this year. There’s a focus in Washington like I have not seen on any issue for many, many years,’ he said. It’s been more than 30 years since the last major tax code overhaul, according to Timmons … Reforms of taxes and regulations, and infrastructure investments, are the trade group’s top priorities, Timmons said. ‘Those all add to the cost of doing business in this country,’ he said. Should Trump’s plans succeed: ‘What I can tell you is what my manufacturers are actually saying and how they are planning,’ Timmons said. ‘They are planning for growth of their own facilities, and they’re planning to hire new workers.’”

Manufacturing leaders, including Timmons and Pennsylvania Manufacturers’ Association President David Taylor, also rallied around the president’s tax reform address in Harrisburg. As the Allentown Morning Call reported:

“Standing in a Harrisburg airplane hangar before big-rig Volvo trucks and American flags, President Donald Trump touted the Republican plan to overhaul the federal tax code as a proposal that will benefit Pennsylvania truckers and an American economy he sees as strengthening …‘If he can deliver on all or even most of what he’s offering, it is going to be a real shot in the arm for American competitiveness,’ said David Taylor, president of the Pennsylvania Manufacturers’ Association.”

The NAM finished off the week strong with an address by Emerson Chairman and CEO and NAM Board Chair David Farr at the Economic Club of Minnesota, where he put opponents of tax reform on notice. As the Washington Examiner reported:

“Critics such as Farr counter that the current tax rate has resulted in the offshoring of jobs because it is often cheaper for companies to move operations overseas. ‘If you’re an opponent of tax reform, I want you to come to Minnesota or Ohio or Wisconsin and look a manufacturing worker in the eye. Tell her she doesn’t deserve a bigger paycheck. Tell her that her family doesn’t deserve to save for school and retirement. Then, tell an unemployed dad that a worker overseas deserves a job more than he does,’ he said.”

As the effort to reform our outdated tax system moves forward, the NAM and manufacturers across America will continue drive the discussion both at the grassroots level and with leaders in Washington.

Just the Facts: Tax Reform Will Boost Manufacturing

By | Shopfloor Main, Taxation | No Comments

A recent study from the Institute for Policy Studies seems to assert that businesses with lower tax rates were not job creators. Specifically, they analyzed “92 publicly held U.S. corporations that reported a U.S. profit every year from 2008 through 2015 and paid less than 20 percent of these earnings in federal corporate income tax.” They then assert that those 92 firms lost 1 percent of their workforce in that time frame versus a 6 percent gain for the U.S. private sector as a whole.

The authors use this analysis to suggest that pro-growth tax reform will not produce the positive employment benefits that its advocates, including the NAM, assert. But, this misses the point. You cannot extrapolate the tax burdens of 92 firms to the larger economy, mostly because there are a variety of reasons why those individual firms might have paid lower tax rates in those years, including deductions for losses in prior years.

The important point—missed in this paper—is that American businesses are at a competitive disadvantage globally, with marginal tax rates in the United States higher than any other major economy. We need pro-growth tax reform—an idea that has bipartisan support. Read More

Senate Must Address Health Insurance Tax and Other Burdens Associated with the ACA—the Clock Is Ticking

By | Health Care, Shopfloor Policy, Taxation | No Comments

Efforts to stop the impacts of the onerous Health Insurance Tax (HIT) must continue as the Senate debates health care legislation. This $100 billion tax levied on fully insured health plans is paid by consumers and, if left unaddressed, will be a shock to retirees on Medicare Advantage and Part D plans as well as employers, individuals and families who purchase off-the-shelf health care plans. That tax will go into effect next year.

Manufacturers are fully behind repealing the “Cadillac” tax, the medical device tax, the health insurance tax and the pharmaceutical tax as well as reducing the burden of the employer mandate. The National Association of Manufacturers sent a key-vote letter to the Senate on Wednesday in support of Amendment 271 to underscore the importance of action on these issues. Unfortunately, the amendment failed in a 45–55 vote.

A full repeal of the Affordable Care Act (ACA) will help employers contain rising health care costs and provide much-needed predictability so that manufacturers can continue providing quality health care to employees. Manufacturers encourage the Senate to unlock the stranglehold of the ACA on manufacturers.

Senate Taxwriters Advance Nomination of Top Treasury Tax Official

By | Shopfloor Policy, Taxation | No Comments

The Senate Finance Committee today approved the nomination of tax expert David Kautter to be assistant treasury secretary for tax policy, clearing the way for Senate confirmation of the nominee to a post where he will play a key role in the tax reform debate.

Over the past several months, tax reform meetings between the House, Senate and administration have heated up and having Kautter in place at Treasury will bring additional technical expertise to these discussions and hopefully help speed up the process. As a liaison to the IRS, he will also play a major role in the current effort underway to repeal or rewrite a number of tax rules issued during the previous administration.

Kautter, whose nomination was put forth by President Donald Trump in May, is extremely well qualified for the job. He serves as partner-in-charge of RSM’s Washington national tax practice. Earlier in his career, he was managing director of the Kogod Tax Center and executive-in-residence at the Kogod School of Business at American University. Before holding this position, he spent more than 30 years at Ernst & Young, serving as director of national tax for more than 13 years.

Advancing pro-growth tax reform and rolling back anti-manufacturing tax regulation are two top priorities for the National Association of Manufacturers, and time is running out on both. Having Kautter in place as the assistant treasury secretary for tax policy will be key to advancing these two initiatives. We strongly urge the Senate to confirm his nomination without delay.

Treasury Opts to Revisit Tax Regulations Causing Problems for Manufacturers

By | Regulations, Shopfloor Policy, Taxation | No Comments

The Treasury Department in a notice issued today said it plans to propose reforms, including possible repeal, of eight sets of regulations issued in 2016 by the Obama administration. Included on the list are four regulation projects of specific concern to manufacturers: Section 385 debt-equity rules, proposed rules on valuing minority interests in family-owned businesses, rules for calculating gains and losses on currency exchanges and regulations allowing contractors hired by the IRS to participate fully in summons interviews and receive summoned documents.

Notice 2017-38 was issued under an executive order issued by President Donald Trump in April that asked Treasury to identify tax regulations issued in 2016 that impose an undue financial burden on taxpayers, add unnecessary complexity to the tax code or exceed the statutory authority of the IRS. Under the executive order, Treasury has until September 18, 2017, to recommend specific changes to regulations to address these issues.

The Section 385 debt/equity regulations were proposed in April 2016 and finalized six months later. As originally proposed, the rules, which would treat intercompany debt as equity, would have imposed new taxes on manufacturers and threatened legitimate and well-established business practices. While the National Association of Manufacturers’ (NAM) aggressive, large-scale advocacy effort was successful in obtaining some favorable changes to the proposed rules, the final regulations still impose a significant and unnecessary administrative and cost burden on manufacturers. We continue to advocate total repeal of these rules.

Also on the list are proposed regulations under Section 2704 on valuing minority interests in family-owned businesses, which were issued in the fall of 2016. NAM members believe that the proposed regulations, which incorporate some of the most sweeping changes to estate tax policies in the past 25 years, would unnecessarily increase estate and gift taxes on family-owned manufacturing companies by an estimated 30 percent or more, severely impacting the ability of owners of these family businesses to transfer their companies to the next generations. If finalized in their current form, these regulations would harm their ability to invest and grow their businesses and reduce their competitiveness versus non-family-owned firms. Consequently, we have urged both the Trump and Obama administrations to withdraw this proposal.

Treasury also included the final and temporary Section 987 regulations on the review list. These regulations, which would change the way companies calculate certain currency exchange gains and losses, would require businesses to change their tax and accounting systems and dedicate significant time and resources to comply with regulations. Moreover, in many cases, companies would not be able to get new technology systems developed and installed by the January 1, 2018, effective date for the final regulations, forcing these companies to spend additional resources on temporary systems.

The Section 987 regulations represent a significant change from the longstanding proposed regulations and impose new and additional compliance burdens on companies. Given the negative impact on jobs, investment and economic growth, we support withdrawal of these regulations.

Finally, Treasury indicated that it will revisit final regulations under Section 7602 that allow contractors hired by the IRS (i.e., outside economists, engineers, consultants or attorneys) access to books, papers, records or other data summoned by the IRS. In addition, under the regulations, contractors may, in the presence of an IRS officer or employee, participate fully in the interview of a person the IRS has summoned as a witness to provide testimony under oath.

The NAM believes that these regulations also should be repealed. The final regulations fall short on both policy and procedural grounds. Moreover, by allowing contractors to participate fully in summons interviews and receive summoned documents, the regulations will lead to longer and less efficient examinations.

Manufacturers applaud Treasury for acting decisively to begin to address the onerous, costly and unnecessary burden these tax regulations impose on manufacturers. We strongly urge Treasury recommend the withdrawal or repeal of these regulations in its final recommendations in September.

Once Again, the House Approves a Measure to Simplify State Taxation of Nonresident Workers

By | Shopfloor Policy, Taxation | No Comments

The House this week, by voice vote, approved the Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393), which clarifies and simplifies the ability of states to tax nonresident employees. The legislation—which sets a bright line test for when states can tax income earned by nonresident workers—has been approved by the House in earlier sessions of Congress but has yet to pass the Senate.

Many manufacturers have employees who travel outside their home states as part of their job. Unfortunately, these out-of-state assignments sometimes result in an arbitrary compliance burden and tax liability for both employees and employers. In particular, employees are required to track and comply with various tax filing requirements while employers are required to maintain records and withhold state income taxes for these employees. This is particularly onerous for small and medium-sized manufacturers that do not have in-house tax departments. Clarifying the ability of states to tax mobile workforces will free up resources for employers to use in their business and leave more money in the paychecks of their employees.

Now that the House has—once more—supported this commonsense legislation, the National Association of Manufacturers urges the Senate to follow suit and pass H.R. 1393.

More in Congress Call for Urgent Repeal of the Medical Device Tax

By | Health Care, Shopfloor Policy, Taxation | No Comments

Co-authored by Christine Scullion, NAM Director of Human Resources Policy

For years, the National Association of Manufacturers (NAM) has been urging Congress to do away with the 2.3 percent excise tax on medical device manufacturers stemming from the Affordable Care Act (ACA) that threatens to hinder growth and innovation in this industry. Now, more members of Congress are joining in calling for a repeal of this onerous taxand fast!

The NAM has always strongly opposed industry- and product-specific taxes, as they serve to inhibit growth in targeted sectors and impede on the ability of  companies to compete in the global marketplace. The 2.3 percent tax applies to sales of taxable medical devices starting in January 2013, but thanks to the efforts of manufacturers and our friends in Congress, a two-year moratorium on the medical device tax was enacted. The moratorium runs out at the end of 2017, making swift repeal a priority.

Congressmen Erik Paulsen (R-MN) and Ron Kind (D-WI) have been leaders on this issue and have most recently introduced the Protect Medical Innovation Act of 2017 (H.R. 184) to repeal the medical device tax once and for all. A bipartisan majority of 245 members of the House have cosponsored H.R. 184. As another positive sign of support in the House, Congressman Jim Banks (R-IN) and 17 other members of the House freshman and sophomore class sent a letter to House Speaker Paul Ryan (R-WI) asking that H.R. 184 be put on the fast track toward passage and enactment.

On the other side of the Capitol, Senate Finance Committee Chairman Orrin Hatch (R-UT) and a bipartisan group of nine senators have introduced the Medical Device Access and Innovation Protection Act (S. 108), which also aims to repeal the medical device tax. The NAM strongly supports H.R. 184 and S. 108 and applauds the bipartisan, bicameral support the legislation has received.

While the effort to repeal and replace the ACA will be a considerable undertaking, the NAM is urging Congress to include full repeal of the law’s burdensome taxes on manufacturers, including the medical device tax, “Cadillac” tax and the health insurance tax in the upcoming budget reconciliation bill.

 

NAM Supports House Action to Rescind Burdensome SEC Rule

By | Shopfloor Policy, Taxation | No Comments

The National Association of Manufacturers (NAM) is pleased that the House will soon be voting on H.J. Res. 41, a resolution providing for congressional disapproval under the Congressional Review Act of a Securities and Exchange Commission (SEC) rule relating to the disclosure of payments by resource extraction issuers (the Section 1504 rule). The existing SEC extraction issuers rule, as finalized, subjects manufacturers to reporting requirements that are overly burdensome and is an impediment to manufacturing growth in the global economy.  Read More