Rhode Island manufacturers agree on one thing about the plan President Barack Obama outlined in his State of the Union address to boost factory work in the Unites States: They were glad to hear a president talk about the importance of manufacturing.
Aside from that, local manufacturing executives appear mixed on the proposals, which seek to encourage domestic production and job creation through tax credits while punishing companies who move work overseas.
Generally supportive of the plan’s intent, Rhode Island manufacturing leaders are concerned about the details and whether the proposals would actually simplify the tax code as intended or make it even more complicated.
“Anytime there are measures taken that recognize the importance of manufacturing in the Unites States and anything that can be done to level the playing field with overseas companies, it is a good thing,” said William McCourt, executive director of the Rhode Island Manufacturers Association, about the plan. “However, our preference would be to see something done as an overall tax policy, not just the bits and pieces in this legislation.”
The comprehensive overhaul of the tax code McCourt said manufacturers are looking for is one that broadens the revenue base by closing loopholes and then lowers rates across the board.
Closing loopholes is a major facet of the Obama manufacturing plan, but although the proposal includes the goal of broad-based tax-rate reductions, there are no details of specific measures to do so.
Some of the bits and pieces in the Obama plan include a provision to block U.S. companies who move operations overseas from deducting expenses related to the move from their domestic tax bill. At the same time, Obama would offer a 20 percent income tax credit to any company now doing work outside the country if it brings some of that home.
To encourage homegrown manufacturing, the plan would target the existing tax-deduction incentive for domestic production more narrowly toward manufacturing and no longer allow it to cover functions like oil production.
Another proposal would deliver $6 billion in tax credits to “finance projects in communities that have suffered a major job-loss event.”
While Rhode Island’s persistently high unemployment rate has made the entire state seem like a major job-loss event, McCourt said it is unclear what could qualify the state for any of that money.
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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