Coalition Urges House Lawmakers To Preserve LIFO Provision
The LIFO Coalition, which the Metals Service Center Institute (MSCI) is a member of, submitted comments last week to the U.S. House of Representatives’ Ways and Means Committee Republican Supply Chain Tax Team. This group of lawmakers is in charge of developing plans to address how to extend the Tax Cuts and Jobs Act (TJCA) provisions that expire in 2025.
Members of Congress will likely have to come up with options to “pay for” lengthening the terms of these policies, which include reductions in individual income tax rates and the Section 199A deduction for pass-through entity income.
While MSCI supports extending the TJCA provisions, it opposes eliminating LIFO to help pay for those extensions. As the coalition’s comment letter explained, the LIFO deduction is an important tax provision that helps businesses maintain inventory levels, U.S. supply chains, and mitigate inflation. For decades, it has been successful in helping businesses manage rising costs.
“The provision is a longstanding and widely accepted inventory valuation method, not a tax expenditure or ‘loophole’ that should be repealed as part of base broadening,” the coalition said. “For these reasons, Democrats and Republicans rejected repeal of LIFO in recent tax reform legislation, and we urge you to reject it again.”
The comments also argued LIFO repeal would disproportionately harm small businesses, cause all types of businesses to reduce employee benefits, destabilize supply chains in a way that would lead to product shortages and cause higher inflation, and cause businesses to forgo new investment, downsize, or even go out of business. Repeal also would result in unprecedented retroactive taxation, punishing businesses based on decisions made decades ago and forcing them to take out loans or defer new investment in order to pay the tax.
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