US manufacturers warn Biden tax hikes could kill jobs, derail industry growth
94% of manufacturers said that higher taxes would harm their business
U.S manufacturers unveiled a six-figure ad campaign this week aimed at squashing vital parts of Democrats' $3.5 trillion reconciliation bill that include steeper taxes on corporations.
The National Association of Manufacturers (NAM) has joined other organizations such as the U.S. Chamber of Commerce and the Business Roundtable in lobbying against the proposed tax hikes, which would be used to fund Democrats' party-line spending plan that would dramatically expand the social safety net. The ad will run in Washington, D.C., as well as key states across the country.
In an industry survey published Thursday, the organization found that nearly 94% of manufacturers said that higher taxes would harm their businesses – while another 90% said tax increases could hurt their ability to expand their workforce, invest in new equipment or expand facilities.
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What's more, 91% of respondents in the manufacturers' outlook survey said that a tax increase would make it more difficult to give employees a wage.
"This survey delivers an urgent warning for lawmakers: if you raise taxes on manufacturers, there will be no avoiding widespread job losses, slower growth and wage stagnation," NAM President and CEO Jay Timmons said in a statement.
Although Democrats have not yet released formal legislation, some of the proposals include hiking the corporate rate to 28% from 21% – reversing a key part of Republicans' 2017 tax law. Given their extremely slim margins in both the House and Senate, Democrats will need to ensure virtually every caucus member votes in lockstep to ensure the bill's passage.
The Biden administration is also spearheading an international movement to impose a global minimum rate on companies' foreign profits, a move that's intended to eradicate certain tax havens that allow multinational companies to shield their profits, while giving smaller countries more tax revenue from bigger firms.
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Treasury Secretary Janet Yellen has said a global tax, which would apply to companies' overseas profits, would eliminate what she's described as a "global race to the bottom" in terms of corporate taxes.
So far, 130 countries in the Organization of Economic Cooperation and Development have endorsed the global minimum rate – which is a growing concern to CEOs across the world.
"At a time when paychecks for manufacturing families are growing at the highest rate in nearly 40 years, the tax increases under consideration by Congress will directly harm the men and women who make things in America," Timmons said.
Despite the potential tax hikes on the horizon, manufacturers identified other issues that posed the biggest threats to their businesses: About 86.4% of respondents said the top challenge they faced was the increased cost of material goods due to pandemic-induced supply chain limitations.
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Another 80% identified hiring – and the struggle in attracting and retaining a quality workforce – as the top issue.