Smith, Morelle, Hern, Schneider Reintroduce Legislation to Support Manufacturing Investment
Washington, D.C. – Today, Reps. Adrian Smith (R-NE), Joe Morelle (D-NY), Kevin Hern (R-OK), and Brad Schneider (D-IL) introduced bipartisan legislation to promote investments in America's manufacturing sector and other capital-intensive industries. The American Investment in Manufacturing Act would amend the U.S. tax code to increase the cap on deductible business interest to pre-2022 levels. This change will promote further domestic investment while helping address concerns about rising interest rates.
Prior to 2022, businesses could deduct 30 percent of earnings before interest, tax, depreciation, and amortization—a deduction standard known as EBITDA. A change in the tax code limits the deduction to only EBIT – excluding depreciation and amortization. This presents an added cost for businesses often required to take out loans to finance large capital investments in their facilities and equipment, this would have a disproportionate impact on the manufacturing sector of our economy and could harm its competitiveness in the global market. The American Investment in Manufacturing (AIM) Act would restore the full EBITDA standard for deductions.
The members released the following statements:
“To unleash the competitive strength of capital-intensive businesses across our economy, we must ensure our tax code reflects the cost of doing business,” said Rep. Smith. “For American manufacturers already suffering under inflation, a worker shortage, and a sustained high-interest environment in the U.S., recognizing the cost of interest expenses could mean the difference between growth and falling behind in the global marketplace. This bill would remove barriers for our companies to secure critical financing, and I thank my colleagues for joining me to introduce it.”
“In a rapidly changing global landscape our nation’s manufacturing economy is crucial to growing the domestic workforce, enhancing competition, and ensuring future growth,” said Rep. Morelle. “I’m proud to join with my colleagues to introduce the American Investment in Manufacturing Act—which restores the full deductibility of interest expense to encourage investment in American manufacturing and strengthen our national supply chain.”
“Thanks to record-high inflation, Americans are hurting. Interest rates are going up, making the cost of capital and investment more expensive. To make matters worse, the new stricter interest deductibility limitation on businesses will fall on the American worker in the form of lower wages and fewer jobs. The increased limitation on interest deductibility makes American business less competitive in the global marketplace,” said Rep. Hern. “I’m happy to support Adrian's bill to reverse the stricter standard and empower American job creators.”
The legislation is supported by numerous stakeholder groups, including the National Association of Manufacturers (NAM) and the National Restaurant Association (NRA).
“The American Investment in Manufacturing (AIM) Act will lower the cost of financing the critical investments in machinery and equipment necessary for manufacturing growth and protect more than 450,000 American jobs. We thank Reps. Smith, Morelle, Hern, and Schneider for their support of the manufacturing sector and urge Congress to act swiftly on this vital legislation,” said NAM Managing Vice President, Tax & Domestic Economic Policy, Chris Netram.
“Restoring the EBITDA-based interest deduction equates to more jobs and opportunities in the restaurant industry, which is a famously low-barrier starting point for 1 in 3 US careers, including my own. Restaurant owners are incredibly thankful for the leadership of Representatives Smith, Morelle, Hern, and Schneider in supporting this bill for those of us working to support the American Dream across the United States,” said Arby’s Franchisee John Wade, on behalf of National Restaurant Association.
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