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Tags: manufacturing | taxes | corporate tax | mike crapo

Manufacturers to Bear the Brunt of Dems' Corporate Tax Hikes

Manufacturers to Bear the Brunt of Dems' Corporate Tax Hikes
(Fuzzbones|Dreamstime.com)

By    |   Sunday, 31 July 2022 10:54 AM EDT

The Democrats' corporate tax plan is going to disproportionately hit U.S. manufacturing, according to a review from the Joint Committee on Taxation (JCT).

The tax is meant to hit companies with profits averaging at least $1 billion over three years, forcing companies like Amazon to pay more, but the 15% minimum tax on large profitable companies will "overwhelmingly hit U.S. manufacturers at a time when they can least afford it," according to Sen. Mike Crapo, R-Idaho, who requested the nonpartisan JCT review.

"The JCT confirmed what we have been saying for over a year: this fundamentally flawed proposal, which has not been properly vetted by either Congressional tax-writing committee, risks severely harming American manufacturers, exacerbating supply-chain disruptions, and ultimately costing U.S. jobs and investment," Crapo said.

"This is a domestic manufacturing tax, plain and simple.

"Now is not the time to resurrect a harmful policy that would overwhelmingly hit American manufacturers and supply chains, as well as undercut critical research and development and investment in emerging technologies."

The JCT review concluded "all manufacturing" in America would be footing 49.7% of the tax hit. That is because manufacturing companies often claim tax credits for production equipment, according to The Wall Street Journal. Wholesale trade (9.3%) or retail trade (4.9%) would pay very small portions of the tax.

"Workers, wages and the economy would ultimately bear the burden of this reckless proposal," Crapo wrote in a series of tweets.

The 15% minimum tax plan would go into effect next year if passed by Congress and signed into law by President Joe Biden.

The attack on U.S. manufacturing, as alleged by the JCT and Crapo denouncing Democrats' tax-and-spend plans, comes as Congress has passed a $200 billion bill to boost U.S. semiconductor manufacturing.

The companies that will be forced to pay up to the 15% rate are those that get income from low-tax foreign locales or have creative tax planning that drive their tax liability far below the 21% corporate rate put in place by former President Donald Trump's tax reform.

National Association of Manufacturers CEO Jay Timmons agreed with the Journal that the plan would "inflict maximum damage on manufacturers."

The plan comes in the deal between Senate Majority Leader Chuck Schumer, D-N.Y., and moderate Sen. Joe Manchin, D-W.Va., which includes spending on healthcare and climate change. Republicans are unanimously opposed, according to the Journal.

The 15% minimum tax would generate 7% more tax revenue, or roughly the equivalent of raising the corporate tax rate 3 percentage points, according to the Congressional Budget Office, the Journal reported.

"If we sort of judge any tax measures by the principle of good tax policy, we'd want revenue, we'd want fairness, we'd want efficiency," former Biden administration deputy assistant Treasury secretary Kimberly Clausing told the Journal. "When you look at this one, it does well on revenue and fairness."

But, as the Journal reported, companies will be able to report significant profits but still pay less than 15% if the claim benefits spending for Democrats' chosen beneficiaries: research, renewable energy, affordable housing, among others.

"Policy makers want to try to thread the needle by getting at what is perceived as an abuse, and safeguarding what is domestic policy passed by previous Congresses," accounting firm KPMG's Jennifer Acuña told the Journal. "It's a blunt instrument to do that."

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The Democrats' corporate tax plan is going to disproportionately hit U.S. manufacturing, according to a review from the Joint Committee on Taxation (JCT).
manufacturing, taxes, corporate tax, mike crapo
554
2022-54-31
Sunday, 31 July 2022 10:54 AM
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