Congress Passes Some Tax Provisions
In Washington, the old saw “nothing is certain except death and taxes” used to be followed by “and tax extenders” because Congress routinely allowed key provisions of the tax code to expire, then rushed to reinstate them, but only temporarily.
Just before leaving town for the Christmas holidays, this Congress actually passed legislation making some of the perennial “tax extenders” permanent and extending others for at least five years. Of particular interest to manufacturers in general and forgers in particular, the legislation made permanent both the Research and Development tax credit and the increased expensing limitations for small businesses. It also extended bonus depreciation for an additional five years.
As the Forging Industry Association (FIA) has lobbied in support of comprehensive tax reform during the past several Congresses, industry representatives have always made the following points:
- All manufacturers must be treated alike.
- Comprehensive reform could only be considered successful if manufacturing became more globally competitive as a result.
As it became clear that comprehensive tax reform would not become reality during the Obama Administration, however, FIA also made sure to let lawmakers know that they considered the Research and Development tax credit, increased expensing of capital equipment and bonus depreciation to be critical to maintaining U.S. manufacturing competitiveness.
Consequently, FIA was particularly pleased to see that Congress stepped up to the issues when confronted with yet another year-end scramble to both continue funding the government and deal with the expiration of tax provisions that many manufacturers had come to rely on in the absence of comprehensive tax reform.
It all happened as part of a so-called “Omnibus” spending bill, and it was the first real test of newly installed House Speaker Paul Ryan (R-WI). Ryan, the reluctant Speaker who agreed to accept the job after the resignation of former Speaker John Boehner (R-OH) in October, faced challenges from the most conservative members of his own caucus (who were itching for fights on defunding Obamacare, Planned Parenthood and the IRS) as well as the most liberal House Democrats (who wanted more spending on a variety of entitlement programs).
Many political observers, jaded by the seemingly endless impasses that Congress had managed to maneuver themselves into in recent years, believed the spending bill would not pass and predicted yet another government shutdown. But this time it didn’t happen. Perhaps it was due to the extraordinary efforts of members of both parties who stayed at the negotiating table, despite significant disagreements on a variety of issues, until they reached an agreement. Maybe it was the new faces and new approaches of Speaker Ryan and his team. Or maybe it was just the Christmas spirit.
Whatever the reasons, Congress passed a significant spending bill that actually contained some important legislative changes beneficial to manufacturers, including forgers. That was a welcome holiday gift and a hopeful start to the New Year.