Recent changes to the U.S. tax code are threatening manufacturers’ continued success—and they need to be reversed now, Winton Machine Company CEO and NAM board member Lisa Winton told U.S. lawmakers at a recent hearing.
What’s going on: Winton, whose 25-year-old company designs and manufactures machines used in tubular part and coaxial cable fabrication, testified before the House Ways and Means Committee at a hearing last Friday on the state of the American economy.
- Winton spoke about the challenges facing manufacturers and highlighted the impact of two recent changes to the tax code that increase the cost of financing machinery purchases: the phaseout of immediate expensing and limitations on deductions for interest on business loans.
- “While I would like to double the size of my facility, the cost of doing so has risen fourfold over the last several years,” said Winton, whose business is one of approximately 244,000 small manufacturers in the U.S.
Why it’s important: “These changes are like a tax on manufacturing growth,” Winton said.
- Winton expressed concern that “these changes will force our customers to keep using older pieces of equipment, rather than purchasing newer or additional ones, or they will buy cheaper equipment from Asia.”
- In addition to these two harmful changes, Winton spoke about another recent revision requiring businesses to deduct or amortize their R&D expenses over a period of years. This makes R&D more expensive because businesses “can [now] only recover a small portion of those costs each year.”
- In sharp contrast to this treatment, China currently allows a “super deduction” for manufacturers, Winton noted.
More to come: There are more harmful changes on the way. The 20% pass-through deduction is set to expire in 2025, “at the same time that tax rates for pass-through entities like ours go up across the board,” Winton said.
- In addition, a scheduled change to the estate tax could force family-owned businesses to sell off pieces of their companies.
The last word: “None of these tax changes are fair to our employees, their families [or] our communities,” she said. “We need to fix them so we’re not making it harder to do business in America.”