April 3, 2008

Washington Post: Wrong on Relief

The Washington Post’s lead editorial today, “Wrong Relief,” is, to put it quite simply, wrong. The premise of the opinion piece—that allowing companies to “carry back” current losses to earlier, profitable years is an “unwarranted bailout” —ignores the whole point of the so-called extended net-operating-loss provision, or NOL. The rules help smooth out swings in income (and tax payments) resulting from business cycle fluctuations and unexpected financial losses and are a godsend to businesses in cyclical industries, like manufacturing.

Under current law, companies can carry back NOLs for a two-year period and the Senate bill would increase this period to four years. Allowing companies in a downturn to “carry back” current losses to earlier, profitable years—like this provision would do—frees up funds that can be used for investment and job creation.

This is exactly what we need to get our economy back in business—more investment and job creation. Extending the NOL period is one way we can do that. In fact, an extended net operating loss carryback provision enacted in 2002 provided much needed relief to a number of manufacturers. In one case, a National Association of Manufacturers' member company was able to reopen a plant within months after the change was enacted, in part because of the refund the company received because of the NOL provisions.

When policymakers were putting together the first stimulus package earlier this year, the NAM pushed for inclusion of an the extended NOL carryback period. We’re pleased the Senate has decided to include it in their latest effort.

Posted by Dorothy Coleman at 10:41 AM | Click here to comment | Send to a Friend

February 29, 2008

Health IT: The Governors Take Charge

As Congress moves (too) slowly on legislation to encourage adoption of health information technology, some state leaders are saying, in effect, "What's taking so long? We've made so much progress at the state level, now let's get moving in Washington."

That was a strong message left earlier this week by three governors speaking at a news conference called by Health IT Now! coalition, an event moderated by National Association of Manufacturers President John Engler.

Governors Chet Culver (D-IA), Joe Manchin (D-WV) and Jim Douglas (R-VT), each outlined the widespread success of Health IT within each of their own states. Their initiatives couple public and private cooperation to bring efficiency to health care via a uniform information exchange network. In switching from paper files to digital information, the states have eased access for doctors and patients to electronic medical records, established medical information exchange via a secure network, and helped bring costs under control.

We've created a webpage with video highlights from the news conference, including links to each governor's statement. Please visit the site here. And the Health IT Now! news release is available here.

(Caption: From left, Governors Culver, Douglas and Manchin discuss health IT at a National Press Club news conference, 2/25/08.)

Posted by Jeri Gillespie at 10:32 AM | Click here to comment | Send to a Friend

February 14, 2008

Small Business Speaks Out on Unfair Taxation

For years, manufacturers of all sizes — particularly smaller ones — have been blindsided by unexpected tax bills from states where they have no real connection, e.g., facilities or employees. The House Small Business Committee this morning took a closer look at the problem and an NAM member from California was willing to share his frustrating and expensive story with the committee.

In his statement, Jerald Otchis, Vice President Finance and Administration at Bobrick Washroom Equipment, Inc. in North Hollywood, explained that his company has no problem paying business activity and other taxes in the five states where they have facilities — California, Colorado, New York, Oklahoma, Tennessee. It’s the tax bills from other states that cause them concern. In fact, the company right now is challenging an assessment from Texas — an effort that already has cost them more than $100,000 and an untold amount of staff time. And it’s not over yet.

Here’s the deal — different states have different rules about taxing out-of-state companies and challenging these tax assessment can be frustrating, timing-consuming and expensive. Unfortunately, many times the amount of taxes involved in an individual case is small in comparison to the cost of challenging, making it less costly for a company — particularly a smaller one—to pay the taxes. But all these extra taxes do add up.

Fortunately, help is on the way. Last week House Judiciary Committee members Rick Boucher (D-VA) and Bob Goodlatte (R-VA) introduced the Business Activity Tax Simplification Act (H.R. 5267) that would establish a bright-line physical presence test to determine when a state can tax out-of-state companies. There’s a similar bill in the Senate. NAM is pushing for quick action on the legislation and we’re hoping that Mr. Otchis’ story and others like his will help spur legislators to act.

Posted by Dorothy Coleman at 12:17 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

February 7, 2008

Falling Behind While Standing Still

Here at the NAM, we’re getting more and more anxious about the impact of our high corporate tax rates on the ability of U.S. manufacturers to compete in the global marketplace. We’d like to see the U.S. government follow the lead of our trading partners and lower the federal statutory rate down to 25 percent or lower.

It looks like Treasury Secretary Hank Paulson shares our concern that, by standing still, we are falling behind. According to BNA’s Daily Tax Report (subscription only), in comments yesterday to the Senate Budget Committee, Secretary Paulson noted that while corporate rates were lower in the 1980s than in the 1970s, they have been creeping up since, relative to international competitors. “The direction of change is what I find alarming," he told budgeteers.

While the Secretary didn’t endorse a specific solution to the problem, he did suggest one possibility that appeals to us—reducing the rates and simplifying the system. He commented that "the whole momentum" of tax policy has been going away from simplification. We couldn’t agree more.

(Paulson's opening statement is here.)

Posted by Dorothy Coleman at 2:47 PM | Click here to comment | Send to a Friend

February 4, 2008

Let's Unlock Those Capital Assets

When a corporation sells an investment, “capital gains” is the amount left over after the company pays taxes on their profit. Companies use this money to invest in new business ventures or pay shareholder dividends.

And right now, there’s not much money left over after paying IRS. The 35 percent tax rate corporations currently pay on capital gains is one of the highest tax rates on corporate capital investment in U.S. history and 20 percentage points higher than the top rate paid by individuals. Rather than paying this 35 percent toll charge, many businesses choose either not to sell underproductive assets or to borrow against them, increasing their debt.

The NAM is working to lower this tax rate, at least to the 15 percent rate that individuals pay. Ending the “lock-in effect” of high taxes could unleash trillions of underused assets into the economy and help businesses operate more effectively and create more jobs. More broadly, it will help promote U.S. economic growth and competitiveness. As an added bonus, since companies will be paying taxes on sales that wouldn’t otherwise take place, Treasury will probably see billions of dollars of new revenue. This happened when Congress lowered the tax rate on individuals’ capital gains.

Now is the time for policy makers to make this change. The National Association of Manufacturers is cohosting a forum today with James Tisch of the Loews Corporation in New York City where corporate executives, legislators and economists will talk up this issue and get the ball rolling on an idea that will benefit, the economy, corporations, their shareholders and their workers.

For more details on today's forum, please go the website of America Gains, a coalition urging reform of current capital gains taxation. A news release for the event is available here.

Posted by Dorothy Coleman at 7:08 AM | Click here to comment | Send to a Friend

January 18, 2008

Changes at the Shopfloor Blog, With More to Come

You may have noticed a few new voices turning up on the Shopfloor blog here at the National Association of Manufacturers, persuasive voices all.

We've added a section www.nampolicyexperts.org, which represents the latest commentary and background from the NAM's vice presidents of policy. These are the NAM's lead personnel on issue areas, well-known figures in the Washington world of public policy and trade associations.

So far we've had Jay Timmons, NAM's executive vice president (congratulations, Jay!), and his take on America's energy dependence; Jeri Gillespie, vice president of human resources policy, offer the business perspective on ERISA and health care; Dorothy Coleman, vice president of tax and domestic economic policy, examine corporate tax rates and economic stimulus; and Frank Vargo, vice president for international economic affairs, dispel the myths about CAFTA.

We'll be unveiling more commentators, improvements, expansions and changes -- in content AND form -- in the coming scores of fortnights. Stay tuned...

Posted by Carter Wood at 12:23 PM | Click here to comment | Send to a Friend

January 17, 2008

On Energy, Plead First for Leadership

This week the President of the United States -- the leader of the Free World -- traveled to the Middle East. At a stop in Saudi Arabia, he took the opportunity to plead with the monarch of Saudi Arabia to increase oil production in order to stabilize America’s economic security.

Is this the image of America that we want?

In 1776, Americans declared independence from the English monarch and pledged their lives, their fortunes and their sacred honor to establish freedom in the new United States.

Today, Americans are dependent again. Fully 60 percent of our oil (and about 17 percent of natural gas) are supplied from foreign sources. And that did not have to be the case.

Beginning with the oil embargo of 1973 when we imported only about a third of our oil, our elected leaders knew we were headed for a major problem. Yet Congress -- controlled by Republicans and Democrats alike at various points since -- turned a blind eye to the problem. Today, Congress continues to ignore the problem. And this Administration, much like every other before it, has not effectively used the bully pulpit to advance a proposal that would increase domestic energy supply.

A recent report by National Petroleum Council found that total global demand for energy -- including from oil and gas and coal and nuclear -- will rise 50-60 percent by 2030, as growing populations seek higher standards of living.

To be sure, there have been many laudatory proposals to encourage alternative energy sources and reductions in demand in the future. But what does our nation do between now and then?

Higher energy costs increase the price of nearly every good and service we need and use. The impact on food is becoming startling, and Americans are dizzy from the upward spiral of gas prices at the pump. This winter’s heating bills will have highly detrimental impacts on those least able to afford it, while working families will have fewer resources for basic necessities.

Congress must take responsibility for the problem. A one time “stimulus” package can provide a quick shot in the arm to our economy, but to preserve our long-term economic security, we must quickly and dramatically increase the domestic supply of gas and oil in the United States. Our economic security depends on it.

Just ask the King of Saudi Arabia.

Write to your Member of Congress and Senator today and demand that Congress increase domestic energy supply now. Go to this link to send an e-mail.

P.S. The President discussed his trip to the Middle East in an "Ask the White House" session Wednesday. Click here for the transcript.

Jay Timmons is senior vice president of policy & government relations at the National Association of Manufacturers.

Posted by Jay Timmons at 3:09 PM | Click here to comment | Send to a Friend

ERISA: Not an Obstacle, but the Foundation

USA Today has a front page story, "Health plans up against U.S. law" (although the online version says "Universal health care plans..."), casting ERISA as a roadblock to state and city health-care "reform" plans. The sidebar on 3A then adds business to the list of obstacles, "Businesses fight plans to ensure health care." The whole premise is off the mark.

The notion that ERISA was intended to “shield” businesses from varying rules and thus impede health care reform is ridiculous. Employers voluntarily provide quality health care to more than 100 million employees in this country. ERISA simply facilitates this process and allows employers to offer these benefits uniformly to employees who live and work in multiple states.

Erode ERISA and you eliminate the primary source of quality care for millions of Americans. How is that for appropriate reform? Complex rules and administrative constraints – which would prevail without ERISA -- make benefits less affordable for employees and their dependents.

Earlier: San Francisco Health Care: Risk and ERISA

Jeri Gillespie is vice president of Human Resources Policy at the National Association of Manufacturers.

Posted by Jeri Gillespie at 2:13 PM | Click here to comment | Send to a Friend

Corporate Rate Cuts Gaining Popularity on the Hill

Treasury Secretary Paulson has called for it, Chairman of the Ways and Means Committee Charles Rangel has proposed it, Bulgaria has already done it. Now we can add more voices to the growing chorus. Yesterday Minority Deputy Whip Eric Cantor introduced the Middle Class Jobs Protection Act (news release here) . Notably, the bill will slash the corporate rate from 35 percent to 25 percent.

Sound familiar? We thought so, too. It’s in fact exactly what the NAM has proposed in our Tax White Paper – A 21st Century Tax Policy to Promote Job Creation and Economic Growth.

In addition to a corporate rate cut, Cantor’s bill (H.R. 4995) also provides for 50 percent bonus depreciation for 2008 and 2009, brings back the five-year carry back period for net operating losses, expands section 179 expensing for purchases up to $1 million, and increases the carry back period for business tax credits from one year to three.

They call it middle class jobs protection – we call it pro-growth and pro-manufacturing.

Dorothy Coleman is vice president of tax and domestic economic policy at the National Association of Manufacturers.

Posted by Dorothy Coleman at 12:26 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

January 15, 2008

San Francisco Health Care: Risk and ERISA

A panel of the U.S. Court of Appeals for the Ninth Circuit has given San Francisco the go ahead to implement its universal health care plan, approving the city ordinance that forces employers to either provide health care insurance to their employees or pay into a fund for the uninsured. A copy of the court's order is here; the case is Golden Gate Restaurant Assocation v. San Francisco.

The decision temporarily blocks a lower court's ruling that held that the city's Health Care Security Ordinance was pre-empted by the Employee Retirement Income Security Act, or ERISA, the landmark 1974 federal law that permits employers to maintain uniform benefits for their employees, regardless of where they live or work. Employers have many differing views on health care reform, but nearly all agree on ERISA's fundamental value. Without it, employers are faced with burdensome and conflicting mandates and regulations from all 50 states and thousands of local governments.

The court's ruling should provide an early indicator of what's to come in terms of "reform" on the health care front. The worry is that other cities and states might act to quickly follow San Francisco, which is just what Congress intended to avoid by passing ERISA more than 30 years ago. We can expect further litigation, potentially all the way up to the U.S. Supreme Court.

At a time when we're concerned with the growing number of uninsured in this country and access to quality health care, do we want to jeopardize a successful program that covers more than 100 million health care consumers? From an employer's perspective, ERISA is the very foundation from which health care was built and while reform is necessary, maybe we should maintain the parts of care proven to work.

Various trade associations and businesses have joined forces to preserve the federal framework embodied in ERISA. Called the National Coalition on Benefits or NCB, our goal is to spread the word about the federal framework that has been successful in encouraging employers to provide the health benefits that many Americans value. The website is www.coalitionbenefitsonbenefits.org. We view this coalition as a way for manufacturers and other employers to stick up for the ability to offer employee health-care benefits across state lines.

A thousand different San Francisco-like health care systems across the country would be impossible to manage, increase health care costs dramatically, and in the end, hurt the quality of care. Let’s prevent that unhealthy outcome by preserving ERISA.

News stories:

Reuters: Court says San Francisco health plan can proceed.

Sacramento Bee: "All Eyes on S.F."

Workforce Management: "San Francisco Health Care Fund Gets Reprieve"

Jeri Gillespie is vice president of Human Resources Policy at the National Association of Manufacturers.

Posted by Jeri Gillespie at 8:13 AM | Click here to comment | Send to a Friend

January 11, 2008

CAFTA: The Jobs Killer Canard

It’s official. With the trade data just released today by the U.S. Department of Commerce, the U.S. trade balance in manufactured goods with CAFTA (Central American and Dominican Republic Free Trade Agreement), has registered a $2 billion trade surplus. This is a sharp reversal from the pre-CAFTA situation, where in the years before the passage of the CAFTA agreement we averaged an annual manufactured goods trade deficit of about -$1.5 billion.

This agreement is the one that isolationist organizations have called “the job killer.” Just before the Congressional vote on CAFTA, one of these groups pronounced, “Like NAFTA, CAFTA is just another outsourcing agreement that will devastate U.S. manufacturing…CAFTA is a continuation of the failed NAFTA policy that drives our rising trade deficit and mounting job losses.”

This was always a silly statement, because the CAFTA countries already had one-way free trade into the U.S. market. The big deal in CAFTA was that in exchange for making their access to the U.S. market permanent, they would eliminate their trade barriers to Made-in-the-USA products. How we could lose in such a deal is beyond me.

Now the facts are in, showing that logic once again prevails over mythology. Far from being a “job killer,” CAFTA has been a real plus for the United States – as has NAFTA, another trade agreement for which these isolationist organizations have been unable to read the trade statistics.

American manufacturing faces some real problems – but CAFTA and other trade agreements are not among them. It would be nice if these anti-trade groups would ‘fess up and acknowledge they were dead wrong, but that probably is too much to hope for.
Congressional Representatives and Senators are besieged by lobbyists advocating various positions on trade. I hope that our elected representatives will start demanding of all lobbyists, “show me the data.” The NAM would be happy to comply.

Frank Vargo is Vice President for International Economic Affairs of the National Association of Manufacturers.

Posted by Frank Vargo at 4:24 PM | 6 comments; click here to read them or submit your own! | Send to a Friend

January 9, 2008

The Hippocratic Oath and Stimulus

When you’re talking stimulus, it’s clear that economic growth and tax increases don’t mix. We’re happy that House budgeteer and member of the Ways and Means Committee Paul Ryan (R-WI) echoes our concern:

House Budget ranking member Paul Ryan, R-Wis., said the most important immediate step would be to block any potential Democratic plans for tax or spending increases. "Most important of all for the markets and economic growth is tax certainty and good fiscal policy. My concern is that Democrats are banking on enormous tax increases," Ryan said. "I think the first order of business for good economic growth is 'Do no harm.'"

From Congress Daily (subscription).

Dorothy Coleman is vice president of tax and domestic economic policy at the National Association of Manufacturers.

Posted by Dorothy Coleman at 4:51 PM | Click here to comment | Send to a Friend