NAM study shows cost of inaction on tax reform
A NAM press release (1/16, Hennigan) announced the release of a study analyzing “the macroeconomic impact of five policy changes” related to US tax reform. The study finds that implementing policy changes would: “increase GDP by more than $12 trillion relative to Congressional Budget Office projections; increase investment by more than $3.3 trillion; and add more than 6.5 million jobs to the U.S. economy.”
Politico (1/16, Flynn) reports in its “Morning Tax” report that a study by the NAM shows the cost of Congressional inaction on tax reform by looking at five recommendations for policy changes: “a maximum corporate tax rate of 25 percent; a globally competitive international territorial tax system; full expensing for capital equipment; an enhanced and permanent policy toward research and development; and parallel changes for non-corporate pass-through businesses.” According to NAM President and CEO Jay Timmons, “This study confirms what manufacturers learned the hard way — uncertainty caused by political gridlock takes a toll on the economy.”
Bloomberg BNA (1/16) reports that the tax plan proposed by the NAM would increase GDP growth by “nine-tenths of a percentage point” each year.
As reported by the Business Journals (1/16, Hoover), the NAM “is trying to light a fire under Congress for comprehensive tax reform” by releasing its new study aimed at calling “attention to the economic potential being lost by Congress’ failure to act.” NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman stated that “we can’t afford” to “leave investment and jobs growth on the table as we drag out our feet and decide how we move forward on this.” The Business Journals note there are “hopeful signs” that tax reform may happen, as five bipartisan working groups have been appointed by the Senate Finance Committee “to analyze current tax law and look at reform options.”
The Hill (1/16, Becker) reports the study’s authors noted that the “estimated impacts are significant and worthy of consideration in the ongoing discussion about the future of pro-growth tax reform.” With regard to the topic of the Republicans’ sought-after “revenue-neutral tax overhaul” the study’s authors wrote that “While one goal of that broader effort might be revenue neutrality, there is no need to impose such a constraint on every individual component of a comprehensive tax reform package.” Coleman added that the NAM knows eliminated tax breaks is part of rewriting the tax code, “but wanted to make clear the price of delaying a needed overhaul.”
A second article by The Hill (1/16, Needham) reports that the NAM study was “conducted by economists at the University of Tennessee and the University of Kansas.”
Science Magazine (1/16, Malakoff) reports that the NAM report shows that making the R&D tax credit permanent could boost GDP by 0.16% annually and add up to 38,300 jobs each year.
The release of the NAM study was also covered in Manufacturing (1/16), and an editorial by Investors Business Daily(1/16) references the study release noting calls for a “simpler, flatter, fairer” tax system.