Revise Damaging Tax Code Changes
Date: December 1, 2023
Revise Damaging Tax Code Changes
Randy Wolken, President & CEO
MACNY joins the National Association of Manufacturers (NAM) and over 1,300 associations and businesses representing manufacturers of all sizes this month, who called on Congress to act quickly in advancing bicameral legislation revising the tax code. Three critical revisions would ensure that the tax code once again supports the ability of manufacturing businesses to create jobs in the U.S. and compete in the global economy. In a letter sent to Congress, the growing coalition writes:
“As tax policy plays a critical role in the ability of businesses to thrive, create jobs in the U.S., and effectively compete in today’s global economy, we write to urge Congress to take immediate action to seamlessly extend three tax policies vital to workers and America’s future: immediate R&D expensing, a pro-growth interest deductibility standard, and full expensing.”
“Although legislation has been introduced in both chambers to support these policies, Congress must act immediately to extend these competitive tax policies. Failing to do so will put hundreds of thousands of family-supporting jobs, cutting-edge innovation, and pro-growth investments in America at risk.”
MACNY has heard from our members. They need a tax code that allows their businesses to be competitive in a global economy. Congress needs to act quickly to:
- Ensure the tax code supports innovation: It is a fact that the private sector accounts for more than 75% of total research and development spending. Small businesses alone account for over $90 billion of all private-sector R&D investments. With wages and salaries comprising approximately 75% of R&D spending, the R&D amortization requirement is first and foremost a jobs issue, with R&D jobs paying an average wage of more than $155,000.Just as important, for every $1 billion in R&D spending, 17,000 jobs are supported.
- Enable businesses to finance growth: Before Jan. 1, 2022, businesses’ interest expense deductions were limited by section 163(j) to 30% of their earnings before interest, tax, depreciation, and amortization. Interest deductions are now limited to 30% of earnings before interest and taxation. By excluding depreciation and amortization, the stricter EBIT standard acts as a tax on investment, making it more expensive for capital-intensive companies throughout the supply chain to finance job-creating growth. These key areas make it harder to compete with companies in other companies that have great tax incentives with regard to financing their growth.
- Make permanent a key incentive for capital equipment purchases: A 100% deduction for the purchase of equipment and machinery in the tax year purchased was in place from 2017 through 2022. Congress enacted full expensing to spur investments and ensure the U.S. is well-positioned to attract capital in a competitive global marketplace. However, full expensing began to phase out at the beginning of 2023 and will be eliminated by 2027. We cannot allow this to occur. Doing so will severely limit capital investment for U.S. companies.
Please reach out to your federal representatives to support these critical changes. To learn more about these needed changes and how you can advocate for them, contact Matt Geitner at [email protected]. Together, we can improve the tax code to provide for needed growth in our manufacturing sector.