Manufacturers press for tax reform in budget talks

A key Washington interest group is urging budget negotiators to include tax reform instructions in their final product.

The National Association of Manufacturers told budget conferees on Monday that it wants to see the corporate rate reduced from 35 percent to 25 percent while maintaining robust incentives for research and development.

Plus, it said that the individual tax system needs to be revamped with the corporate side, given that around seven of every 10 manufacturers in the U.S. pays taxes as individuals.

NAM’s push for tax reform came as it also advocated that the more than two dozen budget negotiators also work to rein in entitlement programs and to revisit automatic sequestration cuts.

“Manufacturers firmly believe it is critically important that any plan to address our debt and deficit issues needs to revamp entitlement programs and advance comprehensive tax reform without raising taxes on manufacturers and other job creators and American families,” Dorothy Coleman, NAM’s vice president for tax and domestic economic policy, wrote to budget negotiators.

“This budget conference offers an opportunity to reset our priorities and make a commitment to growing the economy, which in turn will improve our fiscal situation.”

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Both Republicans and Democrats have said they want to enact policies that boost U.S. manufacturers, with President Obama’s corporate tax reform framework seeking to give manufacturers the chance to get a lower rate than other industries.

Still, top officials on both sides of the aisle — including House Budget Committee Chairman Paul Ryan (R-Wis.) — have downplayed the idea that the budget negotiations will produce the sort of broad deal NAM is lobbying for. The budget committee has until Dec. 13 to reach a deal.

The manufacturing group’s letter also illustrates the challenges policymakers face in trying to overhaul the tax code. While pushing for rate cuts, NAM also asks that budget negotiators protect tax breaks used by the sector, arguing that manufacturing is a key plank in the U.S. economy.

“For every $1.00 spent in manufacturing, another $1.48 is added to the economy, the highest multiplier effect of any economic sector,” Coleman wrote.

“As critical as enacting comprehensive tax reform is to the long term competitiveness of our nation, again, a new system must not result in a net increase in manufacturers’ tax burden — a change that would derail efforts to enhance U.S. economic growth, investment and jobs.”