Tax

House Republicans are taking the first steps toward restoring tax provisions important to manufacturers, according to The Wall Street Journal (subscription).

What’s happening: Legislators are working to get a bill through the House Ways and Means Committee, potentially as soon as this month, though it’s unlikely to ever reach President Biden’s desk. Instead, this effort might ultimately lead to bipartisan negotiations later this year.
 
What’s in it: The bill hasn’t been released yet, but we do know something about tax writers’ intentions.

• The package would “reverse three business-tax increases that took effect over the past few years, aides said. Those changes limited the deductions companies could claim for interest, research costs and capital expenses.”
• Democrats may be willing to negotiate, especially about reinstating immediate expensing for R&D, undoing a 2022 tax change that has forced companies to deduct R&D costs over a period of years and made innovation more costly.

NAM at work: The NAM has been leading the charge to restore immediate R&D expensing, to enable manufacturers to continue financing growth and make permanent a key incentive for capital equipment purchases.

What we’re saying: As NAM Managing Vice President of Tax and Domestic Economic Policy wrote this week to the House Small Business Subcommittee on Economic Growth, Tax and Capital Access:

• “Several harmful tax changes have gone into effect recently that make it more costly to perform research, buy machinery and finance capital investments. If not reversed, these policies will hurt manufacturers’ ability to innovate, create jobs in the United States, invest in their communities and effectively compete in the global economy.”

As part of the NAM’s advocacy campaign, the NAM recently released the Full Expensing Action Center. This action center, which is in addition to the existing R&D and interest deductibility action centers, features a tool enabling manufacturers to send customized messages directly to Congress.
 

Washington, D.C. – The National Association of Manufacturers released its Manufacturers’ Outlook Survey for the second quarter of 2023, which reveals manufacturers’ mounting concerns over the onslaught of unbalanced federal regulations and the threat that poses to sustaining manufacturing investment, job creation and wage growth.

“Congress and the administration have taken bold steps to support manufacturing in the United States. But the positive effects of tax reform, the Bipartisan Infrastructure Law and the CHIPS and Science Act are being undermined by the growing regulatory burden. The unrelenting barrage of regulations threatens to undermine manufacturers’ competitiveness. If the administration’s regulatory onslaught continues, its manufacturing agenda will fail. Unfortunately, we are seeing the signs of exactly that happening,” said NAM President and CEO Jay Timmons.

Currently, the NAM is engaged actively on nearly 100 regulations that have been proposed or announced by 30 different agencies.

Key Survey Findings:

• Only 67% of manufacturers are positive about their own company’s outlook. This is down from 74.7% in Q1, making it the lowest since Q3 2020, and before the pandemic, the lowest since Q3 2019.
• If the regulatory burden on manufacturers decreased, 65% of manufacturers would purchase more capital equipment, and more than 46% would increase compensation.
• More than 63% of manufacturers report spending more than 2,000 hours per year complying with federal regulations.
• If Congress were to enact comprehensive permitting reform, simplifying and speeding up the approval process for new projects, 75.1% of manufacturers say it would be helpful, allowing their company to hire more workers, expand business and/or increase wages and benefits.
• The top challenges facing manufacturers include attracting and retaining a quality workforce (74.4%), weaker domestic economy (55.7%), rising health care/insurance costs (53.1%), unfavorable business climate (52.1%), increased raw material costs (50.8%) and supply chain challenges (44.9%).

You can learn more at the NAM’s online regulatory action center here.

The NAM releases these results to the public each quarter. Further information on the survey is available here.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org

Washington, D.C. – Following an announcement that the White House and House Speaker Kevin McCarthy (R-CA) had reached a deal to avoid default on U.S. debt, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“Manufacturers congratulate President Biden, Speaker McCarthy and their negotiating teams on reaching an agreement to lift the debt limit. As we have said from the beginning, defaulting on our debt would create economic chaos, harming manufacturing workers and their families and jeopardizing our leadership in the world. Congress should act quickly to pass this agreement and to demonstrate to Americans and to the world the continued strength of our institutions and our democracy.

“Manufacturers have been a leading voice for permitting reform, so we are encouraged that this legislation takes critical steps to improve our broken permitting system, helping us more fully leverage our domestic energy sources and expand manufacturing in the United States. We will work with Congress and the administration to build on this progress and create a comprehensive bipartisan permitting reform package that also helps unlock the full potential of laws meant to encourage the growth of manufacturing in America, such as the historic infrastructure law and the CHIPS and Science Act.

“Once this debate is behind us, our leaders must turn their focus to other policies critical to unleashing manufacturing’s full potential: addressing the crushing regulatory burden facing manufacturers, improving our immigration system and ensuring that our tax code supports manufacturing in America by encouraging investments in innovation and capital equipment.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Following the U.S. Supreme Court’s decision in Sackett vs. Environmental Protection Agency, National Association of Manufacturers Vice President of Energy and Resources Policy Brandon Farris released the following statement:

“The Supreme Court’s decision today will help put us on a path to regulatory certainty for manufacturers across the country as all the justices agreed that the EPA had overstepped its authority under the Clean Water Act. Manufacturers are committed to keeping our waters clean and demonstrating environmental stewardship, but Clean Water Act enforcement has been rife with ambiguities and inconsistencies, often allowing the EPA to overreach and attempt to regulate water—and even dry land—that is far beyond the scope of the law. This case demonstrates yet again why manufacturers and our economy need a sensible Waters of the United States proposal that provides clarity and certainty and allows the industry to continue leading the way on environmental protection. The EPA should heed the court’s ruling and revise its latest WOTUS proposal.”

Background:

Previously, the NAM submitted multiple sets of comments regarding the 2015 WOTUS rule to better inform policymakers. In addition, the NAM supported the 2017 executive order instructing the EPA to rescind the rule, and the NAM Legal Center had been in active litigation against the rule starting in 2015. The legal battle included a unanimous victory for the NAM at the U.S. Supreme Court on a key procedural issue, and in 2019, federal judges invalidated the rule.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Today, the National Association of Manufacturers and Make UK hosted a meeting at NAM headquarters where they formalized manufacturers’ commitment to supporting close economic ties between the United States and United Kingdom. Make UK CEO Stephen Phipson and NAM President and CEO Jay Timmons signed an updated memorandum of understanding, which will serve as a roadmap to the cooperation between the two organizations and outlines the key goals and objectives for the partnership.

“The NAM and Make UK have such a strong, special relationship, just as the U.S. and the UK do, and we must continue to deepen that partnership and the commercial and economic ties between our countries,” said Timmons. “Cooperation between American and British companies not only makes our economies stronger, but also strengthens the transatlantic strategic alliances to support the rule of law, freedom and opportunity from those who threaten our shared values. Especially with Russia’s continued assault on Ukraine, it is critical that we unleash the power of commerce to preserve, protect and expand democracy.”

The MOU calls for Make UK and the NAM to work together to provide opportunities for their members to strengthen manufacturing through a number of avenues, including exploring potential trade delegations, trade fairs and business networks; facilitating visits and economic delegations between representatives of the two organizations for promoting trade, investment and commercial exchanges among member companies and organizations; and working together on joint meetings, conferences, seminars, reports, letters and mutually agreed advocacy on trade and investment-related issues.

“Make UK is delighted to have further strengthened our partnership agreement with our American counterpart, the National Association of Manufacturers, as we focus increasingly on boosting cross-Atlantic trade,” said Phipson. “In recent months, we have agreed to a process of even broader sharing of market intelligence, data and policy work, facilitating visits for economic delegations to visit on both sides of the Atlantic to unlock new trading opportunities.

“We will continue to work ever more closely as we look to cement commercial exchanges and opportunities for shared promotion as we build on the ties that have connected our two nations for generations. Relations with the U.S. are vital, and its market is the second-most important for UK goods. In a post-Brexit world, it is likely to assume ever greater importance as part of our efforts to boost global trade.”

Click here to view the full text of the MOU.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Today, the National Association of Manufacturers filed a motion to intervene in National Center for Public Policy Research v. SEC, a case about the Securities and Exchange Commission’s authority to dictate the content of public company proxy ballots and the topics on which shareholders are required to cast votes. If granted intervenor status, the NAM will argue that the SEC’s rules requiring companies to include activist proposals on the proxy ballot violate federal securities law and the First Amendment. Following the filing of the motion to intervene, NAM Chief Legal Officer Linda Kelly released the following statement:

“Manufacturers are facing an onslaught of activists seeking to hijack the proxy ballot to advance narrow political agendas, and the SEC has become a willing partner in the effort. The corporate proxy ballot is not the appropriate venue for policy decisions better made by America’s elected representatives, and manufacturers are regularly caught in the middle as activists on the left and the right bring fights from the political arena into the boardroom. The NAM Legal Center is standing up for manufacturers to ensure they can focus on growing their businesses, driving economic expansion and job creation and creating value for shareholders.”

Background:

• Under SEC Rule 14a-8, public companies are required to include most shareholder proposals on their proxy ballot—proposals that in recent years have skewed increasingly toward social or political topics unrelated from a company’s business and its long-term value.
• The SEC evaluates company requests to exclude certain proposals from the ballot and increasingly requires companies to include and take a position on these proposals. For example, the NAM strongly opposed recent SEC guidance preventing companies from excluding proposals on environmental, social and governance topics of “broad societal impact”—irrespective of whether the proposal has any connection to the company’s operations.
• As intervenor in National Center for Public Policy Research v. SEC, the NAM would argue that the SEC cannot compel corporate speech, in violation of the First Amendment and federal securities laws, by forcing companies to include activist proposals on their proxy ballots.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Following the release of the Environmental Protection Agency’s new rule on power plant emissions, National Association of Manufacturers Vice President of Energy and Resources Policy Brandon Farris released the following statement:

“Manufacturing in America is cleaner and more sustainable than ever, and the power generation sector has been making historic strides in bringing zero-emissions sources online. Even as that trend continues, this proposed regulation will prove unfeasible. With nearly 60% of our nation’s energy generated from natural gas and coal, this will either require deployment of still nascent technologies at an impractical pace or force those plants to shut down entirely. With the many threats to global energy security, that is a grave risk to our economy and to our families. The U.S. cannot afford to shut down more than half of our power generation and grind our economy to a halt. The NAM looks forward to working with the administration to ensure emissions standards protect public health while allowing manufacturers to continue pioneering technologies to make our air even cleaner and our climate even healthier.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. –  A new report conducted by Oxford Economics and commissioned by the National Association of Manufacturers warns that the Environmental Protection Agency’s proposed air quality regulations for particulate matter (PM2.5) are projected to threaten $162.4 billion to $197.4 billion of economic activity and put 852,100 to 973,900 current jobs at risk, both directly from manufacturing and indirectly from supply chain spending. In addition, growth in restricted areas may be constrained, limiting investment and expansion over the coming years. Due to these limited opportunities for expansion or investment, these areas in nonattainment could lose out on an additional $138.4 billion in output and 501,000 jobs through 2027.

Overall, the regulations could make it extraordinarily difficult to create new manufacturing jobs and protect existing manufacturing jobs in areas out of attainment. The regulations could also prevent much needed infrastructure improvements in these areas. This is because compliance with the regulations could require restricting manufacturing operations, resulting in fewer jobs, less investment and higher costs for consumers and families.

“Improving air quality in the U.S. is a top priority for manufacturers, and we’ve worked for years to make progress in delivering some of the cleanest manufacturing processes in the world,” said NAM President and CEO Jay Timmons. “This analysis makes clear these new regulations will weaken our ability to invest in the technology and processes that would continue to reduce emissions—while jeopardizing high-paying manufacturing jobs. We need to let manufacturers do what they do best: innovate and deploy modern technologies to protect the environment, while creating jobs and strengthening the economy.”

Key Findings:

• The regulations create a total economic exposure of $87.4 billion for manufacturing economic activity, equal to 2.4% of the U.S. manufacturing sector’s gross value added.
• The number of manufacturing jobs associated with this exposed activity is 311,600, or 1.9% of all U.S. manufacturing employment.
• Manufacturing in the U.S. exposed to the proposed standard supports between $75 billion and $110 billion in GDP and between 540,500 and 662,300 jobs in the U.S. through supply chain spending.
• Due to limits on expansion and investment, the proposed rule would put at risk approximately $138.4 billion of gross value added (in 2021 prices) and 501,000 jobs in 2027 in areas of nonattainment.
• Under the proposed rule, 200 counties could be placed out of attainment.
• California’s manufacturing sector will be most exposed, followed by Michigan and Illinois.
• Manufacturing operations in the U.S. are environmentally cleaner than the global average.

Find the latest information on the NAM’s efforts to oppose top-down air regulations, including statements from manufacturing leaders, here.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Washington, D.C. – Following the Securities and Exchange Commission’s decision to finalize its costly and unnecessary stock buybacks rule, National Association of Manufacturers Managing Vice President of Tax and Domestic Economic Policy Chris Netram released the following statement:

“The NAM is disappointed that the SEC has chosen to unjustifiably punish manufacturers for returning capital to their shareholders. Manufacturers, investors, retirement plans and the entire economy benefit when companies can efficiently allocate capital via share repurchases. The NAM was successful in convincing the SEC to abandon the most damaging aspect of its initial proposal, but the commission’s attempt to discourage these commonplace, commonsense transactions via an overly complicated, expensive and unworkable disclosure mandate is nevertheless a departure from its mission to enhance capital formation and protect investors.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.81 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

Phoenix, AZ – National Association of Manufacturers President and CEO Jay Timmons and the Arizona Chamber of Commerce & Industry President and CEO Danny Seiden jointly hosted Sen. Kyrsten Sinema (I-AZ) for a discussion with members of the Arizona Manufacturers Council and other local business leaders today at Mercury Systems in Phoenix, Arizona. The conversation focused on the manufacturing workforce and how immigration reform is urgently needed to strengthen it.

“The majority of Americans agree that the United States has a broken and unreliable immigration system, and our industry is united in the belief that this broken system is harming manufacturers’ competitiveness. With nearly 700,000 open jobs in manufacturing today and millions to fill this decade, immigration must be part of the solution,” said Timmons. “We must stay true to the values that have made America exceptional and kept manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity, and that requires a functioning immigration system that addresses our economy’s needs, as well as security and humanitarian concerns. Today’s discussion is an important step in the path toward building consensus for advancing immigration reforms, and we thank the Arizona Chamber of Commerce & Industry and Sen. Sinema for their leadership.”

“Arizona has emerged as a premier destination for manufacturing growth, thanks to the pro-business policies we’ve implemented on a state level that have cut regulations and created an attractive tax environment for job creators to locate and expand,” said Chamber President and CEO Danny Seiden. “Of course, there is so much to be done at the federal level to ensure the continued competitiveness and success of our state and nation’s manufacturing industry – and immigration and workforce must be a part of the discussion. We are grateful for the partnership and leadership of Sen. Sinema and NAM in addressing this critical issue.”

“Mercury was delighted to host Sen. Sinema and global technology manufacturing leaders for this important conversation,” said Tom Smelker, Mercury Systems’ vice president and general manager of microsystems. “The vast majority of advanced semiconductor packaging is done in southeast Asia today, and the United States recognizes the need for more secure domestic capacity. But our skilled labor workforce is constrained, and we need a faster path to bring in more talent.”

Background: The NAM’s immigration policy recommendations are outlined in “A Way Forward,” a plan originally released in 2019 and recently updated to reflect current challenges. The NAM’s “A Way Forward” proposal identifies seven core areas of action for Congress and the administration to take:

• Strengthen border security through physical infrastructure and best-in-class technology.
• Prioritize America’s workforce needs through reforms to the legal immigration system.
• Reform nonimmigrant visas and temporary worker programs to reflect employer needs, including a fund to support STEM programs so that we can reduce the need for these types of visas in the future.
• Provide a permanent and compassionate solution for populations facing uncertainty, including the Dreamers, who were brought here as children and know no other home.
• Reform asylum and refugee programs for a more orderly and humane system, including asylum standards consistent with our values.
• Fix the problem of the unauthorized population with a firm reset, requiring an orderly process of review, including financial penalties for those who seek to become legal and deportation for those who choose to stay in the shadows.
• Strengthen the rule of law, with a focus on gang violence and on requiring localities to cooperate to advance the enforcement of immigration priorities.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.