While manufacturers have been delivering on their promise to create jobs, increase wages and benefits and boost investment following the enactment of historic tax reform, opponents of tax reform are making no secret of their desire to roll back key pro-growth provisions. Case in point: earlier this week, the left-leaning Institute on Taxation and Economic Policy (ITEP) released a wish list of tax increases. The proposals, co-authored by a former aide to Sen. Bernie Sanders (I-VT), would cripple the progress we’ve seen in our economy since tax reform was enacted. The ITEP plan would:
Repeal the 20 percent business income deduction for small pass-through businesses. More than 80 percent of manufacturers are pass-throughs. Thanks to the deduction, manufacturers have more capital to grow their businesses—from adding more workers to investing in new equipment and more. As a strong, consistent voice for pass-through entities, the NAM wrote to House and Senate tax writers urging them to make permanent and enhance the 20 percent deduction.
Eliminate full expensing provision. Reducing the cost of capital equipment purchases is a key priority for the NAM. Full expensing reduces the after-tax cost of capital by providing a 100 percent deduction for the purchase of equipment and machinery. With this critical incentive for investment set to phase down beginning in 2023, making full expensing permanent is another priority for manufacturers as it will help enable businesses to continue to expand and grow our economy.
Roll back tax reform’s meaningful estate tax relief. Significantly reducing the estate tax exemption and imposing tax rates on estates well beyond the current 40 percent rate, as ITEP calls for, would hit family-owned businesses particularly hard and could result in the sale of illiquid assets such as equipment in order to pay the estate tax bill. As a leading member of the of Family Business Estate Tax Coalition, the NAM supports legislation that was recently introduced in the Senate and House to repeal the estate tax.
It is no coincidence that manufacturers have created, on average, 22,000 jobs per month in 2018 (the strongest level in over 20 years). Nor is it a coincidence that the U.S. economy will likely have expanded by 2.9 percent in 2018 once the final numbers are released (the fastest pace since 2005). Tax reform has been key to the impressive economic gains we’ve seen across the country and rolling it back would mean rolling back that progress as well. According to the latest Manufacturers’ Outlook Survey, jobs, higher wages and investment would be at stake if proposals like the ones outlined by ITEP ever became a reality. For these reasons and many others, Congress should look to build on—not backtrack from—the early success of tax reform.
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