AISI: Tax Reform for Business Means Jobs for Individuals

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For Immediate Release
April 15, 2013

WASHINGTON, D.C. – The American Iron and Steel Institute (AISI) today provided formal comments to the House Ways and Means Committee recommending improvements to the tax code.   In the comments, AISI president and CEO Thomas J. Gibson said the steel industry’s contributions are critical to invigorate economic growth and create jobs:

“As Americans file their tax returns today they should be reminded how the steel industry touches their lives – from the essential parts of cars, homes, roads, bridges, food containers and appliances to the purchases of materials, energy, and supplies that stimulate employment.   The steel industry accounts for over $101 billion in economic activity, directly employing over 153,000 people in the United States and directly or indirectly supporting more than one million U.S. jobs.   Like the rest of our economy, the steel industry is recovering from the depths of the recession but is far from fully recovered,” Gibson said.  “If tax reform is to produce real economic growth and job creation to spur economic recovery, it cannot simply be a statutory rate reduction that results in an increase in the effective tax rate on manufacturing.  It must preserve deductions and credits that enhance manufacturing competitiveness and lower the overall taxes that U.S. businesses pay –as other nations have been doing for years.”

Gibson noted that the United States’ combined (federal plus state) tax rate is the highest in the world, at almost 40 percent. 

AISI’s comments to the Committee also focused on preserving certain tax incentives that encourage investment in manufacturing plants and equipment including:  the interest expense deduction, accelerated depreciation, the domestic production activities deduction, the last-in, first-out (LIFO) accounting methodology, percentage depletion and the R&D tax credit.  AISI’s comments also supported eliminating the corporate alternative minimum tax (AMT) and encouraged Congress to ensure that any reform of the Tax Code provides a fair transition to the new system. 

“Steelmakers across the country continue to make major investments to upgrade and open new state-of-the art facilities which cost hundreds of millions of dollars.  These investments often require a company to incur a sizeable amount of debt.  The ability to deduct a company’s interest expense is important to the steel industry and contributes significantly to decisions made regarding investments in major plant and equipment investments.” Gibson said.

He added, “Accelerated depreciation, or bonus depreciation, also has a direct impact on new capital investments which create good-paying, manufacturing jobs and tax revenue for local governments that are part of the foundation of strong communities.”

Gibson also highlighted the Section 199 provision, or the domestic production activities deduction, which was enacted as a result of a World Trade Organization (WTO) ruling that the United States’ extraterritorial income exclusion was inconsistent with WTO rules.  Congress then repealed the extraterritorial income provision and enacted Section 199 to level the playing field for American manufacturers who are at a competitive disadvantage with producers in countries that utilize VAT export rebates.

AISI’s complete comments can be found on the House Ways and Means Committee website, or the AISI website.

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice.  AISI also plays a lead role in the development and application of new steels and steelmaking technology.  AISI is comprised of 24 member companies, including integrated and electric furnace steelmakers, and 124 associate members who are suppliers to or customers of the steel industry.  AISI’s member companies represent over three quarters of both U.S. and North American steel capacity.  For more news about steel and its applications, view AISI’s Web site at www.steel.org .


Contact: Lisa Harrison
202.452.7115 / lharrison@steel.org

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