Business owners, union leader urge U.S. Senate to move ahead soon on stalled tax package • Pennsylvania Capital-Star

WASHINGTON — Business owners, CEOs and a steelworkers’ union official urged lawmakers Tuesday to quickly pass a tax policy bill that has been stalled in the U.S. Senate since the end of January.

The witnesses invited to testify on manufacturing taxation before the Senate Committee on Finance told the panel that the proposal, which includes extending and restoring three business tax incentives, is “critical” to growing their businesses.

“The ability of manufacturers to innovate is so important to global competitiveness, and our fear is without appropriate tax incentives to do that, companies will stand still for too long,” Anna Fendley, director of regulatory and state policy for the Pittsburgh, Pennsylvania-based United Steelworkers, testified.

The Tax Relief for American Families and Workers Act, which passed the U.S. House in January in an overwhelming bipartisan 357-70 vote, has been touted by both parties as a compromise to  temporarily expand the child tax credit while also temporarily reviving or enhancing tax credits available to small businesses and corporations.

Empty spot in the machine shop

Courtney Silver, a business owner in North Carolina, told the lawmakers that the current law’s phasing-out of an additional tax break on new equipment purchases is “something I think about every day” when walking by an empty spot in her machine shop that she had hoped to fill with a new piece of equipment by now.

“I know the piece of machining technology I would like to invest in. It would decrease our lead times, it would increase our productivity, it would get us into new markets that we’re not currently in, and it would create jobs, highly skilled highly paid jobs in machining,” said Silver, owner and president of Ketchie Inc. in Concord, where her company plays a role in the supply chain by making machine parts for manufacturers.

Mark Widmar, CEO of First Solar near Toledo, Ohio, said the company is planning a $400 million investment in a research and development center in the state.

He told Finance Committee Chair Ron Wyden that the passage of R&D tax incentives contained in the stalled tax bill would accelerate his company in the race against China’s solar industry.

“If we’re not able to out-innovate, we will not be able to survive the onslaught that we’re facing today. This bill is critical from that standpoint as it relates to R&D and the opportunity to expensing the R&D versus deferring R&D,” Widmar said.

“Plus it’s also very critical to the bonus depreciation that’s enabling a lot of the factory expansions that we’re making right now,” he added, referring to the expiring tax break on business equipment and property purchases that is also a concern for Silver.

“And putting everything off just generates more uncertainty and delay?” Wyden, an Oregon Democrat, asked in a follow-up question.

“Delay and loss of thousands of jobs,” Widmar answered.

‘The time to act is now’

The bill would buy lawmakers time as they stare down a looming tax code negotiation in 2025 when numerous Trump-era provisions wind down, including the child tax credit refund amounts, lowered individual income tax rates and changes to business taxes.

A provision in the proposed tax bill would actually delay a section of the 2017 Tax Cuts and Jobs Act that critics say disadvantages businesses who write off research and development costs.

The 2017 law mandated that businesses to begin gradually writing off domestic research and development costs over five years starting in 2022.

Wyden’s tax legislation, a bicameral bill with Missouri Republican Rep. Jason Smith, would restore companies’ abilities to expense the R&D costs immediately through 2026.

The Wyden-Smith bill would also restore bonus depreciation to 100% until 2026, meaning businesses could claim additional deductions, beyond the allowable amount, on qualifying business purchases and property.

The 100% bonus depreciation initially established in the 2017 tax law has been waning with each passing year and is currently at 60%. It will continue to decrease until 2027 if lawmakers do not restore it in the proposed tax bill.

Silver, who told lawmakers about her delay in an equipment purchase for her machine shop, said the dwindling bonus depreciation is a “roadblock.”

“That changes my return on investment calculation (on the purchase), and it feels like an irresponsible business decision, and it feels too risky. It’s honestly an awful feeling,” she told lawmakers.

GOP unhappy with provision in child tax credit

Movement on the tax bill has stalled as Republican senators remain opposed to a provision that would allow families to temporarily use prior-year income on their tax returns to calculate their child tax credit if their earnings were higher than the current tax year’s.

The GOP lawmakers maintain that allowing families to choose a higher-year income strips the work incentive for middle- and low-income households that seek the credit. Child tax credit proponents refute that argument.

Wyden urged his colleagues that “the time to act is now.”

“I continue to be open to all sides who want to work in good faith to get this done,” he said in his opening remarks during Tuesday’s hearing. “Some of my colleagues understand the urgency here. And let’s understand that this set of policies isn’t going to be on the table in 2025 if this bill stalls out.”

Ranking member Mike Crapo said he doesn’t know “that there’s a stronger advocate in Congress for extending and making permanent” the business tax incentives.

“My hope is that we can get there, sooner than later,” said Crapo, an Idaho Republican. “There are, as everybody knows, some concerns on the Republican Senate side with regard to other provisions in the bill, and my hope is that the Republican Senate can have its voice, we will be able to deal with it, and get something resolved quickly.

“It’s a difficult time, and as almost every single issue in this Congress today, there are difficult battles to deal with. That being said, I don’t disagree with the testimony of any one of you,” he said to the witnesses.



Originally published at penncapital-star.com,by Ashley Murray

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