While death and taxes are two facts of modern life, death by taxes may soon be less of a worry for small and medium-sized family-owned manufacturers. During last week’s budget “Vote-a-rama,” where hundreds of amendments were offered and considered, Senator John Thune (R-SD) proposed S. AMDT. 607 to reintroduce his plan to repeal the “death tax.” This macabre term is given to the burdensome estate tax on an owner’s right to transfer property at his/her death. (continue reading…)
One of NAM’s goals is to make the United States the best place to manufacture and attract foreign direct investment. There are many things policy makers can do to help achieve this goal, including creating a favorable tax climate. On the flip side, there are a number of ways policy makers can make this goal even harder to achieve, for example by imposing costly, unnecessary, anti-competitive rules and regulations. A case in point is legislation—the Truth in Settlements Act—introduced by Sen. Elizabeth Warren (D-MA) and Rep. Matt Cartwright (D-PA) and several other bills that aim to change the tax treatment of fines and penalties. (continue reading…)
The IRS has announced it will revisit its proposed rule limiting the types of First Amendment activities in which nonprofit organizations may engage. Perhaps the more than 150,000 comments submitted to the agency from groups across the political spectrum or the bipartisan House vote to stop the IRS from modifying the rules helped them see their error.
The NAM filed comments on the rule outlining our concerns about the broad sweep of this rule which could end up eliminating that ability of nonprofit groups to engage in good government efforts such as nonpartisan get out the vote (GOTV) efforts and voter registration activities. We believe our nation remains strong when job creators exercise their Constitutional rights and speak out about public policies that impact growth and U.S. job creation.
Furthermore, an educated electorate is critical to a well-functioning democracy and nonprofit groups across the political spectrum play an important role in this endeavor. The Supreme Court repeatedly has recognized that voluntary associations are key participants in the public debate and that government’s attempt to stifle their voice violates the First Amendment.
The proposed IRS regulations offered to put us on a path to weakening those rights—we hope they will take a very different course in the next version of this rule. Regardless, the NAM stands ready to fight against any further attempt to use tax regulations to restrict political speech and activities that are protected by our Constitution.
Manufacturers that sell/and or distribute their products outside of their home state—and that’s most Manufacturers—currently face a myriad of confusing and conflicting tax rules that cost them time, money and sometimes, business. In a tax reform options paper on Economic and Community Development released May 15th, the Senate Finance Committee did a good job of outlining some changes Congress could make to ensure that tax rules are consistent among the states, thus reducing potential double taxation and compliance costs, while also providing some certainty to states struggling to balance their budget. And that’s a win-win in our eyes.
The NAM-supported chances include:
- Establishing uniform rules for taxing digital goods and services so that manufacturers would no longer be subject to taxation from multiple states based on just one online transaction. The Digital Goods and Services Tax Fairness Act, introduced last Congress by Sens. John Thune (R-SD) and Ron Wyden (D-OR) would eliminate duplicative taxes on digital goods;
- Creating a bright-line test for when a state can assess income tax on an out-of-state employee who is temporarily working in that state. The Mobile Workforce State Income Tax Simplification Act, introduced by Rep. Howard Coble (R-NC), would establish a 30 day bright-line test before states could tax these employees.
- Permanently extending the moratorium on Internet access taxes and multiple and discriminatory taxes on electronic commerce. Without an extension of this moratorium, which expires in 2014, businesses of all sizes could be facing new taxes, further increasing the cost of doing business in the United States. The Permanent Internet Tax Freedom Act of 2013 introduced by Sen. Kelly Ayotte (R-NH) in the Senate and Steve Chabot (R-OH) in the House, would permanently ban the internet tax; and,
- Clarifying how much activity a business must engage in within a state to become subject to that state’s business activity taxes. The NAM has supported legislation (Business Activity Tax Simplification Act) to establish a bright-line, physical presence test clarifying when states can impose business activity taxes so that manufacturers will no longer be subject to punitive tax assessments by states where they have no plant or employees in the state.
While the Senate taxwriters make it clear that their paper discusses options, not proposals, we’re glad that these common-sense clarifications were part of the mix. Each of the options outlined above would further spur economic and job growth by reducing the complexities brought on by having a plethora of differing state taxation rules creating administrative, compliance, and duplicative taxation burdens for manufacturers in the United States.
Christina Crooks is director of tax policy, National Association of Manufacturers.
This morning, the Washington Post editorial board again called for a carbon tax with the piece “Carbon tax is the best option Congress has.” It’s the second time in the last two months (and fourth in the past six months) the Post has called for this tax, which has the potential to hurt jobs and our economy. It’s a surprising amount of attention for a concept that has little to no political legs in Congress.
Congress isn’t talking about a carbon tax because when a cap-and-trade bill like Waxman-Markey is labeled a “job-killing energy tax” and can’t win support in the Senate, it’s hard to get behind a bill that would impose an actual energy tax.
Also, a carbon tax does not appear to be the economic or environmental panacea the Post is making it out to be. A recent economic study for the NAM conducted by the nonpartisan NERA Economic Consulting looked at two carbon tax scenarios: one levied at $20 per ton increasing at 4 percent, and the other designed to reduce carbon dioxide (CO2) emissions by 80 percent. In both cases, any revenue raised by the carbon tax would be far outweighed by the negative impact to the overall economy.
Both cases would hurt families and businesses, resulting in higher prices for natural gas, electricity, gasoline and other energy commodities. The $20/ton case reduces U.S. CO2 emissions by only about 30 percent, a much smaller amount than was called for in Waxman-Markey and by leading climate advocates. To get to the levels they are seeking, 80 percent reductions by 2050, the economic costs skyrocket. (continue reading…)
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…)
Late this afternoon a group of House Republicans lead by Congressman Scalise (R-LA) held a press conference to announce a resolution opposing a carbon tax. Late last month the NAM released the results of a study by nonpartisan NERA Economic Consulting which found a carbon tax would have a negative effect on jobs, energy costs and manufacturing output.
Today, the NAM sent a letter to Congressman Scalise outlining the findings of the study. Below is an excerpt from the letter:
“NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent. NERA also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The overall impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.”
Yesterday, a bicameral group of Democrats released a discussion draft of a carbon tax plan. The NAM’s Ross Eisenberg posted here on Shopfloor.org yesterday regarding their efforts.
The bottom line is a carbon tax resembling the one in our study would drive up energy prices and make it more expensive to manufacture in the United States.
Today, Representatives Henry Waxman and Earl Blumenauer and Senators Sheldon Whitehouse and Brian Schatz released a discussion draft of legislation that proposed to place a carbon tax on greenhouse gas emissions. The lawmakers are seeking input on various aspects of their legislation, including the tax rate and how revenues will be spent. The discussion draft and related background materials can be found here.
Late last month, the National Association of Manufacturers released the results of a study looking at the economic consequences of a carbon tax. The study, conducted by NERA Economic Consulting, examined two carbon tax scenarios: one levied at $20 per ton increasing at 4 percent and the other designed to reduce carbon dioxide (CO2) emissions by 80 percent. Revenues were recycled into deficit reduction and reduction of income tax rates. Both scenarios modeled ($20 a ton and 80% reductions) had a devastating impact on the economy and manufacturers.
NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent.
Our study also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.
A carbon tax resembling the one in our study would drive up energy prices, make it more expensive to manufacture in the United States, and harm our ability to compete with other nations. The NAM believes that any benefits of a carbon tax—under both carbon tax cases—would be far outweighed by the negative impacts to the overall economy.
Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.
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.
Manufacturers of all sizes continue to be bombarded with unexpected and punitive tax assessments by states where they have no physical presence—that is, no plant and no employees in the state. This persistent and growing problem increases their tax burden and injects even more uncertainty into business planning.
Fortunately there is help in sight. Legislation currently pending in Congress—the “Business Activity Tax Simplification Act,” H.R. 1439—would establish a bright line, physical presence test clarifying when states can impose business activity taxes, e.g. state income tax, on out-of-state companies engaged in interstate commerce.
This is smart legislation. It would allow business taxpayers to make investment plans and hiring decisions without the threat of random state tax assessments and costly litigation. State business activity taxes are particularly problematic for small and medium size manufacturers. Typically these companies don’t have in-house tax departments to navigate their way through the time consuming paperwork associated with these taxes, which in some cases include penalties and interest.
Kudos to the Los Angeles Business Journal for an excellent article on one company’s experience with these random state taxes. Bobrick Washroom Equipment, a medium size manufacturer in North Hollywood, CA, spent $185,000 appealing one state’s tax assessment, and spent an additional $100,000 to settle the case. This is real money to a company that would rather spend it on expansion and job creation rather than lawyers and fees.
Policy makers would be wise to enact H.R. 1439 to help provide some tax certainty in a very uncertain tax climate.
Monica McGuire is senior director-tax policy, National Association of Manufacturers.