Manufacturing businesses small and large all struggle to maintain their competitive edge in the current high tax environment. When looking at data from the Organization of Economic Co-operation and Development (OECD), in 2014 the combined federal and state statutory corporate tax rate for the United States was 39.1%. On average, the other members of the organization are being taxed at 24.8% on average. That’s a whopping 14.3 percent lower than businesses here in the United States. This is having a monumental impact on the American manufacturing industry and is a major deterrent when it comes to opening a new manufacturing business in the states.
When the new administration was campaigning, tax reform was one of his main objectives. A clear plan was never truly presented to the public but President Trump insists that there will be changes. On February 25th, Donald Trump tweeted out “Great optimism for future of U.S. business, AND JOBS, with the DOW having an 11th straight record close. Big tax & regulation cuts coming!” (http://lat.ms/2pwpTfR)
Regulation cuts have a relatively clear plan in place but tax reform is still only on the horizon. Manufacturers are coming together to try and encourage the federal government to take action against these unfair rates. The manufacturing industry in America wants to grow, hire new employees and thrive but regulations and overbearing taxes are hindering their ability to remain competitive and in some cases keep their doors open.
The National Association of Manufacturers, the largest manufacturing lobby group, is working feverishly to show the new administration exactly what the industry needs in order to thrive. President Trump is a big supporter of American manufacturing and tax reform could go a long way in creating a better environment for these businesses to grow. One of NAM’s projects, Friends of Manufacturing created a way for those in the manufacturing community to reach out to Members of Congress and show support for corporate tax reform.
As of now there are no specific proposals submitted to Congress but hopes are high for the future. With a renewed focus on the success of American manufacturing, tax reform is a crucial place to start. To create incentive for manufacturers to bring their business back within our borders, they need room to grow. Taxing businesses to the point where they cannot compete in the global marketplace will force them to move elsewhere.
With no plan in place, MFG Talk Radio will be keeping a close eye on the developments and will report back if there are any changes. Be sure to check back soon for the latest trends, news and information surrounding the modern manufacturing industry.