Invest in American Manufacturing

Cosponsor H.R. 5371

The Permanently Preserving America’s Investment in Manufacturing Act

Supported by a coalition consisting of more than 80 organizations, which can be found here

Dear Colleague,

Ensuring that pro-growth investments remain affordable for manufacturers is critical to the American economy. To help ensure those investments continue, the Permanently Preserving America’s Investment in Manufacturing Act allows businesses to continue deducting interest expense at the current level.

Interest on business expenses is generally tax deductible, although the deduction is capped at 30% of earnings before interest, taxes, depreciation, and amortization (EBITDA). At the end of 2021, however, the formula for calculating this deduction will become more restrictive by removing depreciation and amortization from the equation, limiting the ability to deduct interest expenses and creating a new EBIT standard. This change would have a disproportionate impact on the manufacturing sector of our economy, as manufacturing firms are often required to take out loans to finance large capital investments in their facilities and equipment.

Manufacturing firms relying on this type of financing will see their tax liability grow when the new standard takes effect in 2022. Without congressional action, the manufacturing sector will be at a significant disadvantage when trying to hire more workers and further invest in growth. Notably, among the 35 OECD countries that have a similar rule on the tax deductibility of interest expense to earnings ratio, no country currently has an EBIT-based standard.

Across the nation, our manufacturing economy has experienced challenges due to the impacts of the COVID-19 crisis. Now is the time to uplift these businesses; not discourage such investment by allowing this important tax incentive to expire. This legislation would permanently preserve the current formula, allowing for a greater investment in manufacturing firms across the country and strengthening the backbone of our economy.

For additional information, or to cosponsor H.R. 5371, please contact Owen Reilly in Rep. Joe Morelle’s office at Owen.Reilly@mail.house.gov or Josh Jackson in Rep. Adrian Smith’s office at Josh.Jackson@mail.house.gov.

Thank you for your consideration.

Sincerely,