On Tuesday, Congress took an important step toward restoring three of manufacturers’ top tax priorities, as key congressional leaders unveiled a bipartisan tax agreement long sought by the NAM.
What’s going on: The $78 billion Tax Relief for American Families and Workers Act—a compromise between House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR)—would restore immediate R&D expensing, return to a pro-growth interest deductibility standard and reinstate full expensing (also known as 100% accelerated depreciation) for businesses’ capital investments.
- The framework also includes disaster tax relief and $33 billion to partially extend a child tax credit expansion from 2021.
The background: For nearly seven decades, the tax code allowed businesses to deduct R&D costs immediately. But starting in 2022, a change required companies to amortize the costs over a period of years.
- Also in 2022, a stricter interest limitation—which acts as a tax on investment—went into effect. And last year, full expensing began to phase down.
The NAM’s role: The NAM was instrumental in the deal, having made the business case for the tax provisions’ reinstatement to lawmakers for many months, including via an ad campaign, “Keep America Resilient.”
Our take: “Manufacturers appreciate Chairman Smith and Chairman Wyden’s work to reach a bipartisan tax deal with key provisions to advance U.S. economic competitiveness and support manufacturing job creation,” NAM Managing Vice President of Policy Chris Netram said in a social post Tuesday.
- “Congress must move this legislation forward immediately. The time to act is now.”
NAM in the news: Bloomberg Tax (subscription) cited the NAM’s support of the legislation, while Punchbowl News reported on the NAM’s ads in multiple Kentucky papers and Louisiana’s Shreveport Times urging support of the legislation.