Book tax would fall disproportionately on manufacturers
The “book tax” proposed in the Senate reconciliation bill “would hit American manufacturers massively,” according to a new analysis from the Joint Committee on Taxation, the nonpartisan tax expert in Congress.
What’s going on: The reconciliation bill, the outline of which was released Wednesday by Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WVA), proposes a minimum 15% levy on corporations, or “book tax,” on certain businesses.
- The provision is estimated at $313 billion, and JCT finds that manufacturers would be responsible for paying nearly half of it.
What this means: The impact would be rapid and devastating for manufacturers and the economy as a whole, said NAM chief economist Chad Moutray, who conducted his own analysis of the bill’s effects on the manufacturing sector.
Including direct, indirect and induced effects, in 2023 alone the impact would include:
- A reduction in real GDP of $68.45 billion
- 218,108 fewer workers in the whole economy
- A drop in labor income of $17.11 billion
Target manufacturers: “‘This is a national manufacturing tax, plain and simple,'” said Senate Finance Committee member Mike Crapo (R-ID), who requested the JCT analysis.
- “Despite Democrats’ claims, the minimum book tax does not close tax loopholes. The treatment of capital investments, such as those made by U.S. manufacturers, differs for accounting and tax purposes — for good reason,” according to a press release from Senate Finance Republicans.
- “Congress intentionally designed tax depreciation rules to support domestic investment. The Democrats’ manufacturing tax in the United States would eliminate that advantage.