Why Should Congress Make Tax Credits Refundable?
Sen. John Cornyn (R-Texas) is expected to soon introduce legislation that, if enacted into law, would free up the use of general business tax credits. Why is this measure important to the industrial metals industry?
As the National Association of Manufacturers (NAM) has explained, general business tax credits include more than two dozen provisions, such as the research and development tax credit, the work opportunity tax credit, and renewable energy tax credits, and current federal tax law can sometimes prevent companies from fully using these credits in the short term. By temporarily making these credits refundable on an elective basis, Congress can provide struggling companies with immediate access to a source of liquidity.
That is what Sen. Cornyn’s legislation is expected to do.
Amid the economic fallout of the pandemic, many businesses are strapped for cash. Accelerating the use of these credits would provide important relief during this crisis and offer tools to help with reopening and rehiring. As the Metals Service Center Institute, NAM, and more than 100 business groups argued in a letter to federal lawmakers, by slightly altering current law, “struggling companies will have immediate access to a source of liquidity that can help provide increased cash flow to support operations, including rehiring workers.”