October 11, 2017
Manufacturers say growth, jobs would come from Trump’s proposed tax plan
The head of the nation’s largest trade group representing manufacturers was in Milwaukee on Wednesday to talk about President Donald Trump’s proposed tax plan.
Jay Timmons, president and CEO of the National Association of Manufacturers, was here for a NAM Executive Insight Series panel discussion where tax reform was the main topic.
The panelists included Nick Pinchuk, chairman and CEO of Snap-On Inc.; Chris Mapes, chairman, president and CEO of Lincoln Electric; Tom Riordan, president and CEO of Neenah Enterprises; and Mark Schwabero, chairman and CEO of Brunswick Corp.
Trump and congressional Republicans recently unveiled the broad outlines of a nearly $6 trillion tax plan that would deeply reduce taxes for corporations, simplify tax brackets and nearly double the standard deduction used by most tax filers. But many details still need to be worked out.
One provision of the plan would allow businesses for the next five years to write off the full cost of new equipment in the year it’s purchased. Trump said that proposal alone would encourage companies to invest and create jobs.
Corporations could also see their top tax rate cut to 20% from 35%. Trump said a 20% corporate rate would be the lowest top marginal income tax rate for small and medium-sized businesses in more than 80 years.
Critics say the plan would raise the federal deficit by slashing corporate tax rates and eliminating some taxes paid by the wealthy.
Taxpayers in the highest 1% of incomes, making more than $730,000 annually, for example, would receive about half of the total tax benefit from Trump’s proposed overhaul, according to the Tax Policy Center, a Washington-based nonprofit.
However, the tax code desperately needs an overhaul, Timmons said in an interview.
“I am really optimistic about getting tax reform yet this year. There’s a focus in Washington like I have not seen on any issue for many, many years,” he said.
In response to the Tax Policy Center study, Timmons said: “I’m really concerned that folks are hyperventilating right now over whatever they perceive this plan to be. The fact of the matter is that we have no legislative language right now. There are parameters that have been established and goal posts that have been set. It is the job of Congress to get the job done in a way that makes sure we are competitive, that we can add jobs, that we can increase investment incentives"
It’s been more than 30 years since the last major tax code overhaul, according to Timmons.
“The price that we’re paying right now is a very noncompetitive, stagnant economy because of a very outdated tax code. … We’re in a crisis right now involving economic growth,” he said.
“As we have stayed the same for 30 years, other countries have figured out how to take away our economic advantage. They are lowering their tax rates. Ireland is at 12.5%, Canada is at 15%.”
A majority of manufacturers who answered a recent National Association of Manufacturers survey said pro-growth tax reform would make them more likely to expand their business, hire workers and increase employee wages and benefits.
Reforms of taxes and regulations, and infrastructure investments, are the trade group’s top priorities, Timmons said.
“Those all add to the cost of doing business in this country,” he said.
Should Trump’s plans succeed: “What I can tell you is what my manufacturers are actually saying and how they are planning," Timmons said. "They are planning for growth of their own facilities, and they’re planning to hire new workers.”
He added: “They feel that this is the opportunity for tax reform, regulatory reform and infrastructure investment; that this is the opportunity to get back to the robust growth rate we experienced in the past.”
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