The National Association of Manufacturers has launched an industry-wide effort to educate Congress and the administration on the need for urgent action to preserve the pro-growth 2017 tax reform provisions included in the Tax Cuts and Jobs Act that are set to expire at the end of 2025.
NAM says the expiring provisions could result in significant tax increases for virtually all manufacturers.
“The transformative impact of 2017 tax reform cannot be overstated. Tax reform was rocket fuel, igniting a resurgence in the manufacturing sector. It put into place competitive policies that fueled record job creation, wage growth, capital investment and innovation,” NAM President and CEO Jay Timmons said. “However, if Congress does not act, next year’s expiration of these powerful force multipliers will undo much of the progress made by our industry and America. Manufacturers are putting a stake in the ground and warning policymakers to stand up against any tax increases on the people who make things in America.”
Grace Appelbe, the executive director of the Arizona Manufacturers Council, said the campaign to preserve the 2017 tax reforms is vitally important to the state’s manufacturers.
“Since passage of the tax reform bill more than six years ago, Arizona has been riding high, earning national acclaim for its pro-manufacturing environment,” she said. “We don’t want to lose the momentum. We can’t let pro-growth tax policies expire and create a drag on our economy.”
There are several provisions on course to expire.
- The 2017 tax package allows so-called “pass-throughs,” or small businesses whose profits are taxed on the owner’s individual tax return, to deduct up to 20% of their business income on their personal returns, freeing up capital to reinvest in their employees and their growth.
- Individual tax rates are scheduled to increase to pre-2017 levels at the end of 2025. Small businesses that file taxes at the individual tax rate as opposed to the corporate tax rate would be dramatically affected.
- Tax reform allowed manufacturers to immediately expense 100% of the cost of capital equipment purchases. Full expensing enabled manufacturers, and particularly small manufacturers, to purchase new equipment and expand their shop floors, leading to increased productivity and job creation. But this accelerated depreciation schedule began phasing out in 2023 and will expire completely in 2027.
In a letter from Charles Crain, NAM’s vice president for domestic policy, to the chairmen and ranking members of the Senate Finance Committee and House Ways & Means Committee, the manufacturers urged Congress to work quickly.
“Taken alone, manufacturing in the United States would be the eighth-largest economy in the world,” Crain wrote. “But that economic leadership, and therefore the economic security of American families, is in jeopardy if Congress fails to preserve tax reform in its entirety before the end of next year.”