On October 13, RSI joined 460 manufacturers and manufacturing organizations from all 50 states in a letter to congressional leadership warning that rolling back tax reform’s pro-growth provisions would undermine manufacturers and harm job creation.
Download the letter here.
October, 13 2021
Dear Speaker Pelosi, Minority Leader McCarthy, Majority Leader Schumer and Minority Leader McConnell:
We are leaders in manufacturing, a sector critical to the U.S. economy and America’s ongoing recovery from the COVID-19 pandemic. The industry employs more than 12 million people, contributes more than $2.44 trillion to the U.S. economy annually, pays workers nearly 24% more than the average for all businesses, and has the largest economic impact of any major sector.
As part of the 98% of the industry comprised of small and medium-sized firms that form the backbone of communities around the country, we write to express our grave concerns with the significant and damaging tax increases currently being considered in Congress. Increasing taxes on manufacturers is a surefire way to harm the economy and hamper job creation. The Tax Cuts and Jobs Act included a wide range of important reforms, including a lower corporate tax rate, a reduced tax burden on pass-through income, and a modern international tax system. Together, these changes helped drive historic growth in the manufacturing sector. Following tax reform’s passage in 2017, manufacturers kept their promises to create jobs, increase wages and benefits, and invest in their communities. Consider the following:
• In 2018, manufacturers added 263,000 new jobs—the best year for job creation in manufacturing in 21 years.
• Manufacturing wages increased by 3% in 2018, 2.8% in 2019, and 3% in 2020. These year-over year increases were the fastest rates of annual growth since 2003.
• Manufacturing capital spending grew by 4.5% and 5.7% in 2018 and 2019, respectively.
• Overall, manufacturing production grew 2.7% in 2018, with December 2018 being the best month for manufacturing output since May 2008.
The tax increases under consideration would make it harder for manufacturers to continue this growth in the following ways: higher individual and corporate tax rates would reduce capital that small manufacturers could reinvest in their firms; changes to the international tax system would negatively impact globally-engaged companies by undermining their ability to successfully compete in foreign markets and thus directly harming U.S. job creation and investment; limits on deductions (such as deductions for income earned by pass-through entities and interest on business loans) would make it more difficult to fund new equipment purchases; and proposals to tax the transfer of firms to the next generation of manufacturing leaders—such as repealing stepped-up basis, taxing unrealized capital gains at death, increasing capital gains taxes, and expanding the reach of the estate tax—would harm family owned businesses.
These changes pose a significant threat to the U.S. economy and millions of manufacturing jobs. A recent study published by the National Association of Manufacturers found that increasing corporate and individual taxes, repealing the pass-through deduction and making other tax changes would cost the U.S. 1 million jobs in just the first two years after enactment. A separate NAM analysis found that changes to the international tax system would result in 1 million jobs lost. Another study found that repealing stepped up basis would cost America 80,000 jobs per year over the next decade.
Put simply, rolling back tax reform’s pro-growth provisions would undermine manufacturers and harm job creation. We respectfully encourage you to reverse course and refrain from increasing taxes on the creators and innovators who make things in America.
Sincerely,
View the full list of signers here.