CONGRESSMAN JOE MORELLE INTRODUCES LEGISLATION TO PROTECT AMERICA’S MANUFACTURERS

(Rochester, NY) - Today, Congressman Joe Morelle introduced legislation to protect investments in America's manufacturing sector. The Permanently Preserving America's Investment in Manufacturing Act makes a technical change to the U.S. Tax Code allowing businesses to continue deducting interest expense.

"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, which is why I'm taking action to prevent a tax hike that would further harm this critical industry," said Congressman Joe Morelle. "My legislation would permanently preserve the current tax formula, allowing for a greater investment in manufacturing firms across the country and strengthening the backbone of our economy."

Interest on business expenses is generally tax deductible, but capped. At the end of 2021, the formula for calculating this deduction will become more restrictive. Known as the Earnings Before Interest, Taxes, Depreciation, and Amortization standard (EBITDA), depreciation and amortization will be removed from the calculation, limiting the ability to deduct interest expenses. 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.

"As Americans work to reopen and rebuild, we want capital-intensive businesses across our economy to continue investing in themselves so they can hire more workers and sell more products here and abroad, said Congressman Adrian Smith. "Ensuring our tax code appropriately recognizes the cost of doing business, including interest expenses, is one important way we can help manufacturers as they face the numerous other challenges in today's economy."

"Preserving the deductibility of interest expense is critical to manufacturers' ability to invest for the future," said Chris Netram, Vice President of Tax and Domestic Economic Policy, National Association of Manufacturers. "The NAM applauds Reps. Morelle and Smith for working to maintain the EBITDA standard and prevent harmful new interest limitations from taking effect at year's end. Protecting EBITDA means that the women and men who make things in America will have the financial flexibility to expand their facilities, finance equipment and machinery purchases, and continue leading the economic recovery."

The Permanently Preserving America's Investment in Manufacturing Act is supported by a coalition consisting of 82 signatories, which can be found here.