The National Association of Manufacturers has warned that if key provisions from the US 2017 tax reforms are not extended beyond 2025, nearly six million American jobs could be lost. A new analysis by EY highlights the potential economic impact, urging Congress to take action to prevent tax increases that could harm the manufacturing sector.
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If Congress does not act, manufacturers will face higher taxes on pass-through businesses and family-owned firms, increased costs for research and development, and a less competitive international tax system. The study outlines several critical areas at risk, including the pass-through deduction, estate tax, and full expensing for capital investments. The expiration of these provisions would increase tax burdens on small manufacturers and reduce their ability to reinvest in growth.
The corporate tax rate, which was reduced from 35% to 21%, is also a key concern. Any increase could weaken America's global competitiveness. Additionally, changes to foreign-derived intangible income (FDII) and the global intangible low-taxed income (GILTI) regime could discourage investment in the U.S. and make it more expensive for companies to operate domestically.
Manufacturers argue that immediate R&D expensing should be restored, as the current system forces businesses to spread deductions over several years, making innovation more costly. They insist that preserving tax reforms will 'spur job growth, secure the U.S. as a leader in innovation, and reinforce America's competitiveness on the world stage.'
Source: www.hfbusiness.com