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Tax Compromise: Signing Ceremony and Manufacturing’s Reaction

By | Economy, Small Business, Taxation | One Comment

From President Obama’s comments at the bill signing ceremony Friday for H.R. 4853, the tax compromise:

This bipartisan effort was prompted by the fact that tax rates for every American were poised to automatically increase on January 1st. If that had come to pass, the average middle-class family would have had to pay an extra $3,000 in taxes next year. That wouldn’t have just been a blow to them — it would have been a blow to our economy just as we’re climbing out of a devastating recession….[snip]

And millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment, or make upgrades — freeing up other money to hire new workers.

Putting more money in the pockets of families most likely to spend it, helping businesses invest and grow — that’s how we’re going to spark demand, spur hiring, and strengthen our economy in the New Year.

Senate Republican Leader Mitch McConnell (R-KY), who attended Friday’s ceremony and who took the lead in gaining the tax concessions from the President, a Senate floor statement:

I’m pleased to report two pieces of good news out of Congress today. After two years of policies that lacked public support, the tide is beginning to turn.

Today the President will sign a bill that ensures no American gets a tax hike on January 1. Republicans have fought hard for this legislation. Up until last week, most Democrats resisted. But in the end the American people were heard. And that’s a welcome change from the past two years.

The other piece of good news, McConnell said, was Senate Majority Leader Reid’s decision to withdraw the 1,924-page, $1.2 trillion omnibus bill.

The absence of Reid and Speaker of the House Nancy Pelosi prompted much commentary in the blogosphere, as in the Politico piece, “Pelosi and Reid skip bill signing.” Robert Costa of National Review Online has an informative report on the ceremony, “A Tax Deal, and Rev. Al,” a reference to Al Sharpton’s attendance.

Executive Vice President Jay Timmons of the National Association of Manufacturers issued a statement, “Manufacturers: Tax Relief Will Spur Economic Recovery and Job Growth.”

And coverage/commentary with a manufacturing focus:

Rep. Camp Highlights Business Support for Tax Compromise

By | Economy, Taxation | No Comments

Rep. Dave Camp (R-MI), the next chairman of the tax-writing House Ways & Means Committee, kindly mentioned the National Association of Manufacturers and other business trade associations in his floor remarks Thursday in support of H.R. 4853, the tax compromise. Excerpt:

Let’s be clear – this is a bill about taxes – long standing tax policy for that matter – and preventing a tax hike. It isn’t about spending. Over 90 percent of this bill is tax policy – and that policy is aimed at preventing a tax hike for families and employers or providing direct tax relief to American workers.

It also protects family farms, ranches and businesses from being hit by a destructive “Death Tax” that will go as high as 55 percent next year. Instead, this bill reduces that rate to 35 percent while increasing the exemption amount from $1 million to $5 million.

Now, I know $1 million sounds like a lot of money – and it is. But think about the family farmers in your districts, think about the cost of the big machinery it takes to operate and manage their lands – some of the combines I see every day in my district cost a quarter-million dollars each! That isn’t cash in the bank; that is equipment in the field and the federal government has no right to take half of it when mom or dad passes on. While I support a total repeal of the Death Tax, at least this bill makes significant improvements to the Estate and Gift taxes, and it deserves our support.

Members should also know and the American people should know that this bill does not contain “new” policy. New provisions were not snuck in late at night or behind closed doors. We took a firm stand against new policy. As a result, over 70 provisions – some of them my own – were excluded from this bill – well over $100 billion worth.

NPR interviewed Camp earlier this week, “New Chairman Of House Tax Panel Seeks Spending Cuts.”

New York Times: ‘Tax Breaks Bring Hope for Hiring’

By | Economy, Taxation, Technology | One Comment

The New York Times reports on manufacturers’ reaction to the tax compromise moved forward by the Senate on Monday. The story is, “Tax Breaks Bring Hope for Hiring“:

To many manufacturing companies, the tax cut proposal now being considered in Washington may be just enough to spur additional spending and hiring.

At Yushin America, a Rhode Island company that makes and maintains robotic manufacturing equipment, executives say that the business tax breaks would allow them to invest in new machinery, new employees and even a new roof.

“It’s a chance for us to put it back in the business and grow,” said Michael Greenhalgh, operations manager of the company in Cranston, which employs 60 people and has annual sales of about $21 million.

The story quotes the NAM’s Monica McGuire and uses Bison Gear and Engineering in Illinois as a case study of how the tax treatment can spur investment.

Because Bison is organized as a subchapter S corporation, and its income is taxed at its owners’ individual rate, it will benefit if Congress extends the tax break for the wealthy. The company, which has $50 million in sales and 225 employees, will also reap tax savings from the changes in depreciation and research policies.

Ron Bullock, company chairman, said three positions in the research and development staff had been vacant for months as he tried to gauge the strength of the economic recovery and the prospects of a double-dip recession. With the tax savings, Mr. Bullock said, he expects to hire as well as replace aging equipment.

“Other businesses will use their tax incentives to order products from us, which will allow us to hire and, hopefully, expand,” he said. “That’s the way you turn an economy around, and allay the fears people have about whether this economy is a good place to invest.”

Ron is an NAM board member.

On Taxes, a Clear Senate Vote for Extensions, Against a Tax Increase

By | Taxation | 4 Comments

The U.S. Senate on Monday voted overwhelmingly for the Obama-Republican (now with the Senate Democrats, too) compromise on taxes (H.R. 4853), invoking cloture on the motion to proceed by a vote of 83-15. The National Association of Manufacturers had supported the motion through a “Key Vote” letter, and NAM Executive Vice President Jay Timmons issued a statement lauding the Senate vote: “Our country’s unemployment rate remains historically high, and now is not the time to raise taxes on small businesses who are the job creators.”

The Senate reconvenes at 10 a.m. today, with a vote on final passage possible today. House Democrats are making noises about changing the estate tax provisions — 35 percent with a $5 million individual exemption — which is already a major compromise. That could be disastrous politically and economically. Portfolio.com, “Tax Cut Deal Headed to a Vote“:

Changing the estate tax provision could jeopardize Republican support for the bill, however, since the lower estate tax rate was part of the deal they negotiated with Obama. Most business groups contend that high estate rates and low exemptions hurt family-owned businesses.

The estate tax is “a huge issue” for many manufacturers, said Dorothy Coleman, vice president of tax policy for the National Association of Manufacturers.