Manufacturing Leadership by ANVL licensed under CC.
In a recent study published by the National Association of Manufacturers (NAM), the economic impacts of the looming expiration of tax policies in the Tax Cuts and Jobs Act (TCJA) are examined through the experience of manufacturers.
The Tax Cuts and Jobs Act passed in 2017 included corporate rate reductions and relief for pass-through businesses.
The report estimates that the expiration of TCJA policies could put “1.1 million US jobs, $126 billion of US employee compensation, and $284 billion of US GDP at risk,” in the manufacturing, mining, transportation, and information industries.
Those numbers mean that expirations would affect 19% of manufacturing jobs, 23% of employee compensation, and 26% of US manufacturing GDP.
NAM showcases the real-world impacts through video testimonials from 20 presidents and CEOs of manufacturing companies.
The full testimonials can be found here.
The testimonials highlight the importance of TCJA policies to the manufacturing industry. Included below are key moments from each testimony:
1. Ed Paradowski, President and Co-Owner of Reflective Concepts LLC: “From my experience, when four things exist, which are logistics, energy, workforce, and tax/regulatory friendly government policy, business investment takes place. That’s exactly what the tax reform did.“
2. Karl Hutter, CEO of Click Bond: “I urge tax policies makers to be conscious of [manufacturers and family businesses] and take steps to extend and expand lifetime exemptions at this critical time so that our American family businesses can remain advantaged in the way that we are against global competitors“
3. Lisa Winton, CEO and Co-Owner of Winton Machine Company: “R&D is so critical for us. As an American manufacturer, most of our competitors are overseas and they have much more attractive tax policies than we do, so if we don’t have the money to invest in research and development, they’re going to buy equipment from our overseas competitors.”
4. Charles Sukup, Chairman of Sukup Manufacturing Company: “Fortunately, in 2017, the American Congress woke up and lowered the rates to very competitive worldwide, which helps us be more competitive in the export market, as well as fundamentally being able to reinvest more in employees, manufacturing, and capital equipment. The law, when it was passed, was a breath of fresh air. (…) A big jump in taxes, whether its this estate or the corporate tax rate, would be very detrimental.”
5. Aneesa Muthana, CEO and Co-Owner of Pioneer Service Inc.: “The R&D deduction has helped us, obviously, be more innovative and given us the opportunity to put more money back into the company. With these tax laws being changed, that’s really putting a lot of fear and caution in our decision-making.”
6. Chuck Wetherington, President of BTE Technologies: “The 2017 tax law really revitalized manufacturing for me and many others. In particular, the accelerated depreciation aspect was kind of like a free-flowing garden hose that filled our buckets with cash that we could use for reinvestment. We saw such big benefits from the tax code when it passed.”
7. Parker Meeks, CEO of Hyzon: “Having corporate tax rates where they are today versus where they were before and where, unfortunately, they look like they might go in the future, does provide us a real, serious advantage in both competitiveness globally, but also in how many companies, like Hyzon, that are pre-profitability.”
8. Scott Livingston, President of HORST Engineering: “A real threat to manufacturers across our community is a large tax hike on family-owned businesses scheduled for the end of 2025. The estate tax doesn’t just hurt family businesses; it hurts the workers. The estate tax would hurt our ability to invest in our business and in our community.“
9. Dave True, Executive Partner of True Companies: “Estate tax laws need to permit and even encourage family businesses to exist and thrive. Estate taxes rip financial resources from productive organizations.“
10. Tommy Millsap, COO of DT Engineering: “With these tax cuts, our company was able to invest in a joint partnership. This investment helped secure our future as an engineering and manufacturing company. The loss of the pass-through deduction and the increase in our taxes are detrimental to our ability as a company to reinvest in our employees, equipment, and communities.”
11. Lori Miles-Olund, President of Miles Fiberglass: “Like many manufacturers, we’ve benefited from 2017 tax reforms, including important changes like the reduced corporate tax rate, which freed up much-needed capital at our small business. Here, tax reform spurred growth in our business by over 35%, which resulted in a surge of new hires and investments.”
12. Hannah Kain, President and CEO of ALOM Technologies: “Privately held companies are the backbone of American industry, and we need to give privately held companies a chance by stopping the tax increase.”
13. Roger Hargens, President and CEO of Accumold: “I saw firsthand the positive effects of the tax reform of 2017. Thanks to tax reform, Accumold was able to increase our capital investment and add to our teams. If these tax changes take effect in 2025, we will be forced to reduce our employment.”
14. Sara Irvani, CEO of Okabaski Brands: “The R&D tax credit has been something that has really benefited us as we really look to bring more manufacturing back to the US.“
15. Colin Murphy, Owner and President of Simmons Knife & Saw: “Our tax bill has increased dramatically. This has led to less investment in equipment, fewer jobs, and less innovation. Unfortunately, this tax bill was set to expire in 2025.”
16. Patricia Miller, CEO and Founder of M4 Factory: “Everything we got back in R&D taxes was going back into the business to fuel our growth. With the limitations on it right now, it directly impedes the quickness that we can grow and scale.”
17. Lee Dougherty, Head of Engineering at Madsen Steel: “The tax hike will affect manufacturing businesses like ours and make it more difficult for us to hire more employees, raise wages, and drive growth for our business.”
18. Craig Souser, President and CEO of JLS Automation: “Tax reform is a big, big concern weighing on us. We’ve had the luxury of accelerated depreciations and the R&D tax credit, which I think everybody’s taken advantage of. I’d like to think that that’s a long-term play; it’s not going to sunset like it’s presently set up to do.”
19. Courtney Silver, President and Owner of Ketchie Inc.: “I’ve been delaying investments because of the change in the tax policy. Bonus depreciation dropped to 60%, and the fact that I can’t expense the full value of this investment in the year in which I purchased it completely changes the return on investment calculation. This affects our ability to thrive, to grow, and to be competitive.”
20. Austin Ramirez, President and CEO of Husco International: “In 2022, we lost the ability to expense our R&D investments. Now, in 2024, we have $20 million less liquidity than we would have under the old R&D expensing rules. Without tax reform, we’ll be forced to either cut our investments or turn to expensive external financing that will put us at a disadvantage relative to our international competitors.”
The testimonies of manufacturing leaders demonstrate the staggering economic fallout in the event TCJA is not extended.
Americans for Tax Reform has documented additional testimonials from manufacturers here.