MSCI Works With Trade Group Allies To Oppose Business Tax Increases
The Metals Service Center Institute (MSCI) signed two letters last week asking U.S. lawmakers to oppose the Inflation Reduction Act of 2022. (Please note that while the title of this bill claims the legislation would reduce inflation, the nonpartisan Congressional Budget Office found it actually would slightly increase inflation.)
As Connecting the Dots reported last week, as originally written, the Inflation Reduction Act would have created a 15 percent corporate minimum tax to raise $313 billion over 10 years, reformed to reduce Medicare prescription drug pricing, boosted the IRS enforcement budget by $124 billion, and close the so-called “carried interest loophole.”
The first letter, organized by the National Association of Manufacturers (NAM) and signed by MSCI and more than 125 other organizations, opposed the inclusion of a tax on the financial statement income of certain businesses (“book tax”) in the bill. The nonpartisan Joint Committee on Taxation found nearly 50 percent of the burden of this tax would fall on manufacturers. The NAM found that in 2023 alone the tax would result in 218,108 fewer jobs, reduce real economic growth by $68.45 billion, and decrease total wages by $17.11 billion.
The second letter, organized by the U.S. Chamber of Commerce and signed by MSCI and more than 250 other organizations, said the book tax “would be neither simple nor administrable,” would pose “a competitive disadvantage to U.S.-headquartered businesses while increasing the incidence of unrelieved double taxation,” and would have a detrimental effect on the quality of financial reporting.
Shortly after the letters were sent, Senate Majority Chuck Schumer (D-N.Y.) announced a deal with Sen. Kyrsten Sinema (D-Ariz.) to eliminate the carried interest provision, add a one percent excise tax on stock buybacks, and adjust the corporate minimum tax provision to exempt depreciation tax deductions.
That last concession will benefit industrial metals companies and manufacturers, which frequently use accelerated depreciation on equipment purchases.
Despite the revisions, the U.S. Chamber of Commerce (USCC) said it will continue to oppose the bill. In a statement, USCC Vice President and Chief Policy Officer Neil Bradley said the “new excise tax on stock buybacks will only distort the efficient movement of capital to where it can be put to best use and will diminish the value of Americans’ retirement savings.” The National Association of Manufacturers (NAM) also still opposes the bill.
The Senate voted on the revised plan this past weekend, approving it on a partisan 51-50 margin with Vice President Kamala Harris casting the tie-breaking vote. House lawmakers could consider the measure as soon as this Friday, August 12 even though the House is currently out of session for August recess.
MSCI member company employees who want to make their voices heard in opposition to the legislation can use this portal from NAM to send a letter to their member of the House asking them to vote against the Inflation Reduction Act this week.