August 3, 2022 - Associated Industries of Missouri President/CEO Ray McCarty joined colleagues in other states in signing a letter coordinated by the National Association of Manufacturers to federal legislators in opposition to tax increases contained in the "Inflation Reduction Act" reconciliation bill - a bill that could receive a vote as early as this weekend.
"I doubt many business leaders support the notion that raising taxes on their businesses is a solution to inflation and the current recession," said McCarty. "We witnessed the impact of tax cuts under the previous administration resulting in a booming economy. It doesn't take an economist to realize that tax increases will harm the economy - not improve it," he said.
While the letter details the impact on manufacturers, the tax increase would be devastating to the national economy because of the impact on all businesses, given the current economic decline caused by runaway inflation. Of course, the near record inflation rates are driven in large part by other government decisions, including the massive amounts of government money injected into the economy and some of the highest energy costs in decades that are at least partially due to environmental actions of the Biden administration.
Here is the letter and we will report back to you on the bill as developments occur:
"We, the undersigned trade associations, representing hundreds of thousands of businesses across the nation that collectively employ millions of Americans, write to express our opposition to the inclusion of a tax on the financial statement income of certain businesses (“book tax”) in H.R. 5376, the “Inflation Reduction Act” reconciliation legislation.
Economic analyses demonstrate the harmful impact of this provision. The nonpartisan Joint Committee on Taxation found that nearly 50% of the burden of this tax would fall on manufacturers. The National Association of Manufacturers found that in 2023 alone this would result in 218,108 fewer manufacturing jobs, reduce manufacturing activity by $68.45 billion and decrease manufacturing wages by $17.11 billion.
Accelerated depreciation – the ability to recover the cost of acquiring an asset over a short time span, sometimes as soon as the year of purchase – has been in the tax code in some form since at least 1958. This policy encourages companies to invest in capital assets, like machinery and equipment, that power long-term economic growth. But unlike the tax code, the financial accounting rules upon which a book tax is based require depreciation over the useful life of an asset. As such, a book tax would effectively eliminate this long-established incentive to invest in the United States.
It is clear that a book tax would threaten American competitiveness. The broad impact of this measure is reflected in the group of undersigned stakeholders. As such we respectfully encourage the Senate oppose a book tax in the final reconciliation legislation."