One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining Association (NTMA) and the Precision Metalforming Association (PMA). The two associations joined forces in 2008, using their federal government advocacy program to give a voice to the thousands of middle-market manufacturing companies in the country who supply tooling, components, and other manufactured products to Original Equipment Manufacturers and their Tier I and Tier II suppliers. One Voice advocates for policies that will ensure a strong manufacturing sector in the United States.
April 03, 2014
In a recent survey of manufacturers who are members of the National Tooling and Machining Association (NTMA) and the Precision Metalforming Association (PMA), 74% of respondents reported they currently have job openings and are looking to expand their businesses, yet many are holding back on investing in new equipment due to the uncertainty resulting from U.S. Congress letting tax provisions expire.
Manufacturers face an annual problem when Congress fails to extend important tax provisions at the end of year (only to pass them retroactively in the following year). This could be addressed by an overhaul of the tax code. There is a growing bipartisan consensus to consider comprehensive tax reform for the first time in almost 30 years.
House of Representative Ways and Means Committee Chairman, Dave Camp (R-MI), recently put forth a blueprint for such a comprehensive overhaul of the U.S. tax code system. The proposal seeks to add clarity and create a more stable framework to the U.S. tax code over the long term. While the package is likely to evolve and inspire competing proposals, it offers a hopeful signal that the U.S. Congress recognizes the need for tax reform that would provide an end to the uncertainty that has long presented unneeded complications for companies that are trying to plan for the future.
Key provisions of Camp’s bill offer some positives for manufacturers. The bill includes a 25% tax rate for all manufacturers, regardless of whether the business is structured as a C-Corporation or a pass-through, and the permanent extension of the R&D Tax Credit. It also makes permanent Section 179 Expensing—a top priority for manufacturers—at a limit of $250,000.
The proposal repeals bonus depreciation, transitions LIFO and gradually phases out the Section 199 Domestic Production Activity Deduction. Many manufacturers use these provisions and PMA is working with Congress on steps to reduce the impact that these changes would have on small businesses.
Both NTMA and PMA commented on the proposal in a February 26 joint press release: “An overhaul of our tax code is long overdue and Chairman Camp deserves a lot of credit for having the leadership and courage to take on this important issue,” said PMA President, Bill Gaskin. “This is more than just about lowering rates – it is about simplifying the code, making it globally competitive, and creating certainty around provisions that are important for small businesses seeking to invest in the future of their companies.”
“Small and medium sized manufacturers are the foundation of our economy but have long been burdened by a tax code that provides a disincentive to manufacture in America, inhibiting both job creation and business growth,” said NTMA President, Dave Tilstone. “This proposal sends a strong message that we need tax reform for all manufacturers and not just C-Corporations as proposed by some in Washington.”
Will 2014 be the year that comprehensive tax reform starts to move through Congress? Make certain to check in with this blog for regular updates.