Sometimes the ranking of #1 is a dubious distinction… surely no one wants to be #1 on the “worst companies to work for” list, the “worst Super Bowl Commercial” list, the “worst movie of all time” list or the “worst dressed” list, but one year after Japan’s corporate tax rate cut went into effect, the U.S. continues to be home to the highest corporate tax rate in the world.

We live in a competitive world. Everyone, from executives, to states, to countries, wants to be able to compete for investment and jobs – and that is all the more true in the aftermath of the great recession. Yet, a year after reaching this “pinnacle” of worst tax policy, nothing has changed.

The NAM has long advocated for comprehensive pro-growth, pro-job tax reform that will result in a permanent competitive tax code that will allow the U.S. to compete with our peers around the world. As articulated in in the recently released Growth Agenda, “The United States needs a comprehensive plan for economic growth. A bipartisan commitment in Washington to pro-growth policies will make our nation a more competitive place to do business.”  At the heart of this plan is an updated tax code and to improve our competitiveness, it is essential that the United States overhaul its tax system at the corporate and individual levels – something that has not been undertaken in nearly 30 years.

Manufacturers have applauded the stated commitment of the Chairmen of the Congressional tax writing committees – the House Committee on Ways & Means and the Senate Finance Committee – to undertaking comprehensive tax reform. We have high hopes that under the leadership of Chairman Dave Camp (R-MI) and Chairman Max Baucus (D-MT) respectively, the Committees will succeed in this effort this Congress. And we continue to weigh in with both committees as to what manufacturers believe must be included in any comprehensive tax reform plan to make it competitive for manufacturing which at the heart must include creating a national tax climate that enhances the global competitiveness of manufacturers in the United States and the avoidance of policy changes that would increase the tax burden on the manufacturing sector, discouraging job creation and investment. (continue reading…)

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 were pleased to read a bi-partisan op-ed by Senator Orrin Hatch (R-UT) and Congressman Jim Matheson (D-UT), who have recently introduced legislation to repeal the Health Insurance Tax (HIT) provision of the Affordable Care Act (ACA), highlighting the escalating costs of health care on small businesses and the adverse relationship this tax will have on their ability to grow jobs in our economy.

As nearly 70 percent of the NAM’s small and medium-sized manufacturers buy health insurance in the fully insured marketplace, the HIT tax will significantly drive up the cost of coverage which comes on top of the nearly 10 percent average increases in premiums that companies’ experienced last year. While the tax technically falls on insurers, CBO has confirmed that it “would be largely passed through to consumers [small business owners and their employees] in the form of higher premiums for private coverage.”

Manufacturers believe it is critical that Congress take action to repeal the HIT tax to help make health care coverage more affordable and to encourage employer provided health insurance for employees before it goes into effect beginning in 2014.

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!

People love to compare the U.S. and U.K. – we say “fries, elevator and apartment” and they say “chips, lift, and flat.” The differences in the way we turn a phrase is amusing – the way we differ in our approach to corporate tax policy is hardly so.

Today the U.K. announced it is reducing its corporate tax rate to 20 percent – exactly half of the U.S. rate. In fact, the U.S. maintains the highest corporate tax rate in the world among developed nations – a first place finish no one should be proud of. Given the reasons our nations separated, the irony of being envious of tax policy in the U.K. should not be lost on anyone, least of all our policymakers.

A major part of pro-growth policy is competitive tax policy – and with every day that the U.S. corporate rate is the world’s highest, the rest of the world is passing us by.

It’s far past time that we reformed our corporate rate to a level that will attract investment and growth. It’s a major piece of the puzzle to achieving a manufacturing resurgence and, as a result, an economic resurgence as well.

The NAM applauds the action of the House Agriculture Committee earlier today in reporting out two bills that are critical to derivatives end-users like manufacturers. These bills, H.R. 634, the “Business Risk Mitigation and Price Stabilization Act of 2013” and H.R. 677 the “Inter-Affiliate Swap Clarification Act” are key priorities for manufacturers and will ensure that end-users are fully exempt from posting margin and that inter-affiliate trades are not treated the same as market-facing trades and are exempt from clearing requirements.

As a steering committee member of the Coalition for Derivatives End-Users the NAM has been leading in advocating for the passage of these bills. Today’s mark-up came on the heels of last week’s House Ag Committee hearing where the Coalition had two witnesses testify in support of these bills including NAM member company Honeywell who testified in support of H.R. 634. That these bills were reported out of the House Agriculture Committee so quickly following the hearing is a solid indication that strong support exists for end-users.

We now look forward swift consideration of these two common-sense, cost and job saving bills in the near-term by the House Financial Services Committee in the coming weeks and the NAM will be leading the charge to have this accomplished.

End-users continue to watch the time tick by on the countdown clock to the implementation of various aspects of Dodd-Frank while still awaiting clarity on a couple of critical – and costly – regulatory burdens which currently seem poised to impact them. In an ongoing effort to help find that clarity, the NAM has been working diligently as a leading member of the Coalition for Derivatives End-Users on both the hill and before the regulatory bodies implementing the law. Today we hope marked a positive step forward in the House Agriculture Committee’s hearing, “Examining Legislative Improvements to Title VII of the Dodd-Frank Act,” which featured testimony by NAM member and Honeywell International Assistant Treasurer Jim Colby. Colby testified on behalf of Honeywell and the Coalition — in support of coalition-backed legislation H.R. 634, which would provide a clear exemption from margin requirements for non-financial end-users as was the original intent of Congress.

The NAM has long advocated for this legislative fix and has worked longside the Coalition at the regulatory bodies urging that the rules promulgated under Dodd-Frank include this exemption. During the last Congress, the same legislation cleared the House overwhelmingly with over 370 votes in favor and withered in the Senate despite bipartisan support. We’re hopeful that today’s hearing and Ag Chairman Lucas’ indication that the Committee will soon move to mark up the bills included in the hearing will result in quick action that will allow the bill to be considered by the House Financial Services Committee and by the full House of Representatives in the near term.

The hearing also featured testimony in support of another NAM and Coalition endorsed bill, H.R. 677 which would exempt inter-affiliate and centralized hedging center unit swaps from clearing and other regulatory requirements intended for market-facing swaps. This legislation also clarifies a provision in Dodd-Frank that failed to distinguish internal risk management techniques in the form of inter-affiliate swaps from external market facing swaps. Many companies today use centralized hedging centers or centralized treasury units as a risk management tool – one that is often considered a best-practice. Under Dodd-Frank it this structure wasn’t contemplated and today without a change, the internal swaps a company does between these centers and their own affiliates would be subject to the same costly reporting and clearing requirements as external swaps with a swap dealers or a major swap participant. Further, the bill ensures that non-financial end-users who utilize these centralized hedging centers are allowed to use the end-user clearing exemption. Without this clarification, these centralized hedging and treasury centers wouldn’t qualify for the end-user clearing exemption because they would be deemed financial entities since their primary function is to engage in financial transactions for the corporate parent.

We are pleased that the committee also considered H.R. 677 today and hope that it too will be marked up and ready for review by the House Financial Services Committee and the full House in the near-term. A predecessor of this bill moved in tandem with a margin bill last year and also passed the House with over 350 votes. We hope to see that replicated soon.

So, while the clock ticks, hopefully today’s hearing is the first steps towards fixing these two burdensome problems casting a shadow over sound risk management practices employed by end-users.

This morning, a report released under the Hamilton Project banner of “Innovative Approaches to Tax Reform,” proposes the “Elimination of Fossil Fuel Subsidies.”  Unfortunately, the paper ignores sound tax policy and takes aim at a package of long-standing tax provisions that enable oil and gas companies to explore and develop new domestic sources of energy.

Indeed, Manufacturers take umbrage to a number of assumptions in this paper. So let’s start at the top. The report argues that the so-called “subsidies” provided to the industry for domestic production “have a very small impact on production” and thus eliminating these (so-called) subsides would have “a very small impact on production, their removal will not materially increase retail fuel prices, reduce employment or weaken U.S. energy security.” This belies so many real-world facts that we just had to respond.

First, the provisions in question are not subsidies. They represent sound tax policy that, among other things, allow energy companies to deduct ordinary and necessary business expenses and recover their capital costs. In contrast, subsidies are direct payments from the government to entities. This is clearly not what the paper is talking about.

One thing on which manufacturers can agree with the author is the need to enact a “simpler, more efficient tax code” – this is true especially in today’s world where the U.S. has the highest corporate tax rate. This leads to the second fact that is ignored in this report… that oil and gas companies with a global market and worldwide consumers have to look at worldwide production opportunities and U.S. production projects have to compete with opportunities elsewhere. With this reality, good tax policy matters in attracting development and production–and jobs– in the U.S. Despite the author’s assertion that “none of the current tax expenditures for fossil fuels targets novel techniques or … promotes innovation,” horizontal drilling and the sophisticated techniques used in hydraulic fracturing are two innovations that are fairly recent, were costly to develop and have resulted in the development of game-changing resources that are still emerging. And these projects are a boon to local domestic economies where they are ongoing.

Continuing along with our fact-checking, how did the author conclude that oil and gas production is not manufacturing as a basis for his argument that the domestic manufacturing tax deduction for oil and gas should be eliminated? Merriam Webster defines manufacture as: “1) something made from raw materials by hand or by machinery; 2a) the process of making wares by hand or by machinery especially when carried out with division of labor, b) a productive industry using mechanical power and machinery; 3) the act or process of producing something.” That pretty much sums it up, by all accounts oil and gas production is manufacturing by its very nature. Perhaps a refinery tour is in order!

Finally, the report is a wolf in sheep’s clothing as it is apparent that the author seeks to use the tax code to advance an environmental agenda. Throughout the report the author refers to the environmental benefits of a reduction in carbon emissions resulting from a reduction in production and consumption. Manufacturers, like all concerned citizens are concerned about the environment. However, if the author wants to have an environmental debate and address what he proposes as environmental impacts, then that debate should not be engaged under the guise of tax reform.

Manufacturers strongly support comprehensive tax reform, one that lowers the corporate rate to one that is competitive, includes a territorial system of taxation, that includes a permanent and strengthened R&D credit, includes permanent lower rates for small businesses and that includes a robust capital cost recovery system. With these principles as a starting point manufacturers want to engage in a tax reform discussion but if the starting point is from the position taken by this author, then this debate may remain long-awaited.

A potential proposal of a carbon tax and all the damage that would accompany such misguided policies has been making headlines in Washington of late. Senators Barbara Boxer (D-CA) and Bernie Sanders (I-VT) have introduced legislation that would implement this damaging tax.

The NAM weighed in on the issue today with the release of a study conducted by NERA Economic Consulting, titled Economic Outcomes of a U.S. Carbon Tax. The report found that levying such a tax would impact millions of jobs and result in higher prices for natural gas, electricity, gasoline and other energy commodities. Manufacturing output in energy-intensive sectors could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent.

This week Treasury Secretary Nominee Jack Lew said that, “the Administration has not proposed a carbon tax, nor is it planning to do so.”

Senator David Vitter (R-LA), the ranking Senator on the Environment and Public Works Committee, has sent President Obama a letter asking if the Administration will live up to Mr. Lew’s promise.

With the evidence from the NAM’s report so clear that a carbon tax would have a catastrophic economic impact, we hope that the President will uphold his promise to never propose such a foolhardy, punitive tax that would undermine the U.S. economy.