Policy and Legal

Congress should pass H.R. 1—the tax bill—immediately, manufacturers told congressional leaders Monday.

What’s going on: The tax package delivers on the promise made by the administration and Congress “to ensure the United States leads the world in manufacturing,” the NAM and more than 300 manufacturing leaders told Senate Majority Leader John Thune (R-SD) and House Speaker Mike Johnson (R-LA).

• The legislation extends and makes permanent the pro-growth provisions from the 2017 Tax Cuts and Jobs Act, which proved to be “rocket fuel” for the manufacturing industry.
• Many of the measures from the TCJA have expired, and others are scheduled to sunset at the end of this year—unless Congress acts.

What it does: H.R. 1 extends key measures from the TCJA “and builds on their success,” the NAM and its allies said. Here’s what the bill does:

• Provides tax certainty for small manufacturers: The bill “permanently extends the 20% pass-through deduction and preserves the TCJA’s individual tax rates, both of which are crucial for the 96% of small manufacturing businesses organized as pass-throughs.” It also protects small family-owned manufacturers from the estate tax.
• Supports investment and innovation: The measure restores immediate research-and-development expensing, full expensing for capital equipment purchases and an EBITDA-based interest deductibility standard.
• Bolsters American competitiveness: The bill makes the FDII, GILTI and BEAT international tax regimes permanent and preserves the 21% corporate rate.
• Incentivizes growth: H.R. 1 creates a new deduction that allows companies to immediately expense the cost of new factories and the cost of improvements to current facilities, among other moves.

The precedent: Manufacturers know the pro-growth tax policies in the legislation will work because they’ve worked before, the NAM and manufacturing leaders told the House and Senate.

• “Following passage of the Tax Cuts and Jobs Act, manufacturing in the United States secured the best year in job creation in more than two decades, the best wage growth in 15 years and impressive growth in capital spending, increasing by 4.5% in 2018 and by 5.7% in 2019.”

The cost of inaction: Failure to pass the legislation would result in a nationwide loss of 5.9 million jobs, $540 billion in wages and $1 trillion in GDP, according to a recent NAM study.

Amplifying the NAM message: The message was amplified quickly on social media by key decision makers, including the White House, Speaker Johnson and House Majority Whip Tom Emmer (R-MN).