The National Association of Manufacturers (NAM) has recently sent a letter to the Treasury Department’s tax policy division, urging the Biden administration to reverse certain tax policies that the organization believes has had a negative impact on the competitiveness of the U.S. manufacturing sector.
NAM is asking for the reversal of three tax policy changes that have been implemented in the past year. The first is a change that, since the beginning of 2022, has prevented most companies from immediately deducting 100% of their research and development (R&D) expenses in the year they are incurred. As a result, NAM’s economic research estimates that in 2023, the U.S. economy will lose over 263,000 jobs and $82 billion in gross domestic product due to this change.
The second policy change concerns a stricter limitation on the deductibility of business interest, which has effectively raised the cost of financing for businesses. Finally, NAM is asking for the reinstatement of the 100% expensing deduction for the purchase of equipment in the tax year it was purchased.
NAM notes that these policies make it more expensive for manufacturers to perform R&D activities, buy machinery, finance capital investments, and undertake job-creating investments. The organization believes that by reversing these policies, the Biden administration can ensure that manufacturers can effectively compete in the global economy and invest in their operations, workers, and communities.