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US Firms Hail Proposed US Tax Reform Law

by Glen Shapiro, Tax-News.com, New York

03 November 2017


The National Association of Manufacturers (NAM) has said the tax reform legislation newly released by the US Administration will be a "grand slam" for manufacturers and the economy.

President and CEO Jay Timmons said: "Today is a tremendous day in America thanks to this grand slam for hardworking manufacturers and the US economy. The proposal is a guaranteed path to surge investment, jobs, and economic growth that will lead to better lives for every American."

"The NAM's recent Manufacturers' Outlook Survey of our 14,000 members – large and small – indicated that real and meaningful tax reform will result in more investment and job creation. 64 percent said they will invest in new equipment, 57 percent said they will hire more workers, and 52 percent said they will increase pay and benefits. This plan is the real and meaningful reform that they are looking for, and the change they voted for almost one year ago."

"Above all, manufacturers are cheering this bold proposal […] because these tax cuts will make a real and positive difference for middle-class Americans, creating more wealth for higher wages, to reduce the cost of living, and to increase savings for retirement and the future. These outcomes are what these real reforms are all about – and why they're needed.

"This announcement builds on the momentum from last month's budget votes in the House and Senate. Manufacturers look forward to continuing to work closely with the Ways and Means Committee and House leadership to advance these reforms so that manufacturers and manufacturing workers in the United States win against their global competitors."

The US Chamber of Commerce also voiced support for the bill. Senior Vice President and Chief Policy Officer Neil Bradley said: "This bold tax reform bill is exactly what our nation needs to get our economy growing faster. A lot of work remains to be done to get the exact policy mix right and move from a legislative draft to an enacted law. We share Chairman Brady's commitment to permanent reform because temporary tax relief simply will not produce the pro-growth environment we all desire. The business community stands ready to be an active partner with lawmakers over the coming weeks – and every step of the way – as we push to complete a re-write of our outdated tax system."

The US Chamber on Tuesday sent a letter to all members of Congress signed by nearly 300 business groups and state and local chambers of commerce, "as evidence of its commitment and determination," saying, "Completing the task will not be easy. We commit to working with you to achieve our shared goal of comprehensive, pro-growth tax reform."

For businesses, the bill will bring about a landmark shift to a territorial corporate tax system, replacing the current worldwide tax basis regime and therefore subjecting companies to tax only on US-source profits, and establishing a 20 percent corporate income tax rate, in place of the current high 35 percent federal rate.

The plan also provides that firms will be able to immediately expense capital investments for five years and limits interest expense deductions to 30 percent of a group's earnings before interest, taxation, depreciation, and amortization.

In addition, for pass-through businesses, such as S corporations and partnerships, whose shareholders or partners are taxed under the personal income tax regime, their tax rate will be capped at 25 percent, subject to anti-avoidance provisions to ensure that individuals can't inappropriately reduce their effective income tax rate.

The plan imposes a "modest" tax on unrepatriated foreign earnings held offshore, of 12 percent for cash and similarly liquid assets and five percent for illiquid assets.

TAGS: environment | tax | investment | business | commerce | law | retirement | budget | manufacturing | legislation | United States | tax reform

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