Strengthening tax breaks to promote manufacturing in the US received strong bipartisan support at a Senate Finance Committee hearing on March 16.
Creating new incentives, and making temporary ones permanent, are particularly critical for helping American competitiveness in semiconductors, batteries and other high-tech products, Senate Banking Chair Ron Wyden (D-Ore) and Ranking Minority Party Member Mike Crapo (R-Idaho) stressed at the session.
Wyden said it is urgent for elected officials to create conditions for the American semiconductor industry to thrive as part of a Congressional job creation toolkit. “I have seen too many short-term tax policies and mistakes,” the Senate Finance Chair said. His sentiment was echoed by Crapo, the committee’s top Republican: “This is an area of bipartisan interest, and I welcome the opportunity to work with Chairman Wyden on this.”
Don’t Raise Corporate Rate
At the same time, Crapo cautioned Congress that it should not offset losses in federal revenue from increasing the stability of investment importance of protecting tax credit credits by raising the overall corporate tax rate. He said he is “very concerned” by reports that the White House is preparing to propose just that. Currently at 21 percent, the corporate tax rate was 35 percent before the 2017 Tax Cut and Jobs Act took effect.
Massachusetts Institute of Technology Sloan School Of Management Accounting Professor Michelle Hanlon told the hearing that raising corporate tax rates would put American industry at a competitive disadvantage globally. She said the 2017 tax cuts should be built upon to expand manufacturing.
While saying expanding tax breaks for tech, including clean energy, is critical, Senator Tom Carper (D-Del) warned that the federal government is looking at an avalanche of debt. To lessen that surge, he said it is important to go after the tax gap: money that taxpayers owe but are not paying.
Senator Todd Young (R-Ind) warned that left unchanged, in 2022 companies will no longer be able to write off research and development expenses in the year incurred. “This would come at the expense of manufacturing jobs,” he said. Young has introduced legislation to let businesses write up R&D as they are currently allowed.
If businesses are not allowed to continue to amortize their research and development expenses in the year they are incurred, it would significantly increase the cost to perform R&D in the U.S., Intel Chief Financial Officer George Davis warned the panel.
Ford Embraces Biden Proposal
Ford Motor Company Vice President, Global Commodity Purchasing and Supplier Technical Assistance Jonathan Jennings told the Senate that the auto maker embraces President Joe Biden’s proposal to provide a 10 percent advanceable tax credit for companies creating U.S. manufacturing jobs.