Manufacturers Face Significant Cost Increases if Tax Bill Fails
U.S. manufacturers and other businesses are sharing the details of the potential economic fallout if Congress fails to pass , pro-growth tax legislation, (subscription) reports.
What鈥檚 going on: 鈥淸L]arge public companies say the law as it stands is costing them hundreds of millions or billions of dollars, while some owners of small and medium-sized businesses say they wonder if their firms will survive.鈥
- The Tax Cuts and Jobs Act of 2017 allowed manufacturers across the U.S. to expand their businesses, hire and purchase new, much-needed equipment. But in 2022 and 2023, from the law鈥攊mmediate expensing for domestic research and development, enhanced interest deductibility and full expensing鈥攅xpired, hurting businesses of all sizes.
- In January, the House passed the Tax Relief for American Families and Workers Act, which would reinstate all three measures. The 17吃瓜在线 the Senate to pass the legislation, too.
Why it鈥檚 important: Lift truck and solutions manufacturer Hyster-Yale Materials Handling Inc. 鈥渟pends around $100 million a year on R&D, and the law change that went into effect in 2022 increased its tax bill by about $25 million a year.鈥
- 鈥淪o that鈥檚 $25 million less that I have to invest back into my business, whether it鈥檚 R&D, whether it鈥檚 plants and equipment [or] hiring new people,鈥 Chief Financial Officer Scott Minder told the Journal.
- Other companies say the lack of action on the House-cleared tax bill 鈥渕ay prompt reduced investment in other areas and increase the rate of return required for new projects.鈥
Weighing a move: Hyster-Yale鈥攚hich 鈥渟pends around 80% of its research budget in the U.S.鈥濃攚ould like to keep its operations in the U.S., Minder continued, but it can鈥檛 guarantee that it will continue to do so without the return of the expired TCJA tax provisions.
- Other manufacturers are reporting a similar predicament.
鈥嬧赌嬧赌嬧赌嬧赌嬧赌嬧赌The last word: 鈥淭he stakes are clear: Congress must pass the Tax Relief for American Families and Workers Act or risk significant economic damage across the manufacturing sector,鈥 said 17吃瓜在线 Vice President of Domestic Policy Charles Crain.
- 鈥淢anufacturers are depending on Congress to restore these pro-growth tax policies, which support the investments in R&D and capital equipment that are so critical for manufacturing growth.鈥