The proposed “book tax” or “corporate minimum tax” in the Senate’s reconciliation bill “would overwhelmingly hit U.S. manufacturers,” according to a new analysis by the Joint Committee on Taxation, Congress’ nonpartisan tax scorekeeper.
What’s going on: The reconciliation bill, the outline of which was released Wednesday by Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV), proposes a 15% minimum corporate levy, or book tax, on certain companies.
- The provision is estimated to raise $313 billion, and JCT finds that manufacturers would be responsible for paying nearly half of it.
What it means: The impact would be swift and devastating to manufacturers and the economy as a whole, said NAM Chief Economist Chad Moutray, who conducted his own analysis of the bill’s effects on the manufacturing sector.
Including direct, indirect and induced effects, in 2023 alone the impact would comprise:
- A real GDP reduction of $68.45 billion
- 218,108 fewer workers in the overall economy
- A labor-income decrease of $17.11 billion
Targeting manufacturers: “This is a domestic manufacturing tax, plain and simple,” said Senate Finance Committee Ranking Member Mike Crapo (R-ID), who asked for the JCT analysis.
- “Despite Democrats’ claims, the book minimum tax does not close tax loopholes. Treatment of capital investments, like those made by American manufacturers, differ for book and tax purposes—for good reason,” according to a press release from Senate Finance Republicans.
- “Congress intentionally designed tax depreciation rules to support domestic investment. Democrats’ tax on U.S. manufacturing would eliminate that benefit.”
Correcting Manchin: On Sunday, Sen. Manchin responded to the NAM’s concerns about the bill’s tax hikes, telling NBC’s “Meet the Press ” that “the last two years have [seen] massive, record profits. … And with that being said, it’s been the lowest investment of capital expenditure that we’ve ever had. So it’s not the taxes that’s driving this.”
- The NAM moved swiftly to correct the record, responding via Twitter: “[H]ere are the facts: @Sen_JoeManchin, in 2021, business investment in equipment jumped 13.1%. IP Investments like patents, trademarks and other tech innovations rose 10%, according to BEA GDP data. These are solid rates of growth. Companies are reinvesting & driving future productivity.”
- “Also, @Sen_JoeManchin, manufacturing employment rose by 365,000 in 2021, the most since 1994, and we’ve already added 242,000 workers through just the first six months of this year. We’re investing in our people.”
The NAM, Arizona Chamber launch ads: Axios was first to report on the NAM and state partner Arizona Chamber of Commerce and Industry’s ad campaign in opposition to this bill. Newsweek also covered the campaign.