In a letter to Speaker Paul Ryan sent last week, the National Association of Manufacturers (NAM) offered their suggestions to Congress as the House and Senate versions of the tax bills are going through the process of being reconciled into a single piece of tax legislation.
NAM’s Vice President of Tax and Domestic Economic Policy, Chris Netram, communicated in his letter a set of top priorities that are viewed as crucial points to support a strong US manufacturing base and encourage business growth. The key points included:
- Maintaining the corporate tax rate at no more than 15% – Both the Senate and House versions of the bill were looking to settle on a 20% corporate tax rate.
- Elimination of the corporate AMT (Alternative Minimum Tax) – This provision was removed in the House bill but had reappeared in the Senate version of the legislation.
- Lowering the tax on pass-through business income – Whether by lower tax rates or increased business deductions, this provision is a key benefit for Small to Mid-sized Businesses (SMBs), many of whom pay business taxes by filing the personal income tax return of the owner or proprietor of the business.
- Removing provisions such as the House bill’s Section 4303 – This provision would “impose an excise tax on foreign affiliate payments,” and as such NAM believes could have the effect of creating “an incentive to move manufacturing offshore, and would ultimately reduce American manufacturing jobs.” Eliminating the provision would reduce the incentive for sending jobs overseas to minimize tax bills.
- Expensing capital purchases - Allowing full expensing of capital purchases over a 5-year period rather than requiring depreciation of these assets expenses over a longer time horizon will help to encourage investments for long-term growth. Both bills do have this provision in place.
- Maintaining incentives for Research and Development - Specifically, the letter suggests the keeping in place the R&D tax credit and reversing course on plans in both bills that would have R&D expenses moved from deductible to amortized costs.
The desire to deliver a consolidated tax reform measure to the President for his signature has the legislative branch working around the clock to complete the process. The conference committee held a public meeting yesterday, and later last night new announcements emerged which indicated an agreement had been reached, setting the stage for a final congressional vote next week before Congress breaks for the Christmas holidays.
The latest reports indicate that there are some changes over the preceding Senate and House versions. The earlier announced corporate tax rate of 20% has been bumped up to 21% in the consolidated bill, but it will take effect in 2018 instead of 2019 as had been included in the Senate proposal. And it also appears that the corporate Alternative Minimum Tax (AMT) which was in the Senate version has been removed.