This article by Glenn Hamer originally appeared in the Rio Grande Guardian September 30, 2021.
To fight a global pandemic, it took a global supply chain. U.S. leaders rapidly partnered with scientists and manufacturers to ensure they had the resources necessary to meet the needs of our nation. Emergency authorization was granted, and vaccines were produced in record-breaking time. If there is one single positive to come out of the pandemic, it is the example of what is possible when the government works with businesses, rather than against them. And yet, some in Washington D.C. seem to have forgotten their friends in manufacturing.
Congress is considering a $3.5 trillion reconciliation package, which they plan to pay for on the backs of businesses through major tax hikes.
The legislation would raise taxes on manufacturers and otherbusinesses by $2 trillion, and hurt our international competitiveness. The package includes a drastic increase to our corporate income tax rate, ratcheting it up to a whopping 28 percent. That would give us the highest corporate income tax rate in the industrialized world — higher than China. The impact would be felt by workers and their families in terms of reduced wages; companies will be deterred from headquartering in the U.S., and it will increase costs for taxpayers.
At a time when our nation is still fighting a pandemic and reeling from uncertainty, this reconciliation package could hurt our ability to manufacture critical supplies — and stifle our economic recovery.
The National Association of Manufacturers published research suggesting the U.S. stands to lose 1 million jobs and $107 billion in GDP in the first two years. A separate report commissioned by the Texas Association of Business (TAB) estimated the economic impact of the proposed changes to the GILTI rate — suggesting we could lose 107,000 jobs when combining impacted U.S. multinational corporations (MNCs) and related economic activity.
Pushing for tax increases sounds better when the victim is a faceless corporation, but Americans know these victims. The actual consequence of the $3.5 trillion spending plan is that taxes will be raised on manufacturers, like the ones that produced the vaccine. To fight a global pandemic, it took a global manufacturing network. Companies that brought us the lifesaving COVID-19 vaccine,have hundreds of sites across the globe. That’s important, because it takes a multitude of partners — from manufacturing to storage and transportation — to get billions of shots in arms.
Manufacturers were, and still are, on the frontlines of our fight against COVID-19. They produce critical supplies, develop treatments and vaccines, while continuing to provide the essentials for daily life. And yet they are targeted, simply for bearing the scarlet letter of democrat politics: they are “corporations.” Proponents of the tax increases baked into the spending plan keep repeating the same stale talking point that “corporations need to pay their fair share.” These corporations include manufacturers, and rest assured, they already pay far more than their fair share — 21 percent in corporate income taxes. Ratcheting it up to 28 percent, on top of drastic increases to the Global Intangible Low-Taxed Income (GILTI), a staggering 10.5 percent to 21 percent, will seriously wound every affected manufacturer. How are we supposed to ensure the supply of critical products, including vaccines, if we are simultaneously weighing down their economic recovery by increasing taxes? How can manufacturers create more jobs if their operating costs skyrocket? And how will everyday Americans be able to afford household products if these tax increases force manufacturers to raise their prices? The bottom line is that at a time when our nation’s businesses are still rebounding from the first global pandemic in 100 years, the last thing they need is a tax increase. That’s why I’m calling on the entire Texas delegation to reject this package.
The only way out of this mess is to work alongside businesses, not against them.
Editor’s Note: The above guest column was penned by Glenn Hamer, president & CEO of the Texas Association of Business, an affiliate of the National Association of Manufacturers.