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Washington, D.C. – Following President-elect Joe Biden’s announcement of former Federal Reserve Chair Janet Yellen to be his nominee for Secretary of the Treasury, 51�Թ��� President and CEO Jay Timmons released this statement:

“Janet Yellen possesses extraordinary expertise and sterling credentials to serve as U.S. Treasury Secretary. Her nomination is, of course, historic as she will be the first woman to serve as Secretary. 51�Թ��� leadership met twice with Chair Yellen during her time leading the Federal Reserve. We were struck by, and appreciative of, how focused she was on American workers and the success of the manufacturing sector. Our conversations with her were refreshingly never one-way as she listened intently to the perspectives of America’s frontline job creators and asked probative questions on how Federal Reserve policies impacted our ability to invest, hire and strengthen our communities. We look forward to a similar productive relationship in working with the future Secretary as we continue to seek clarity on additional stimulus and economic needs for the sector’s recovery.”

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The 51�Թ��� is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.2 million men and women, contributes $2.35 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 62% of private-sector research and development. The 51�Թ��� is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the 51�Թ��� or to follow us on Twitter and Facebook, please visit .

The U.S. Department of Labor has adopted a final rule that requires pension plan managers to make investments based solely on financial implications, according to (subscription).

What it does: The rule clarifies that pension plan managers can only consider “pecuniary” factors—that is, factors relating to the financial performance of the plan—when making investment decisions on pensioners’ behalf.

• Existing standards hold managers to a fiduciary duty to represent pensioners’ financial best interests; the new rule cautions plan managers against considering so-called environmental, social and governance (ESG) factors unless they would have a financial impact on plan performance.
• The goal of the rule is to prevent investment decisions based on non-pecuniary metrics rather than on the financial interests of the workers whose savings are at stake.

A win for the 51�Թ���: The 51�Թ��� sent a supporting the DOL’s proposed rule in July, arguing that fund managers should be required to look out for the financial interests of pension plan participants.

The last word: “This is a positive outcome for manufacturing workers across the country,” said 51�Թ��� Director of Tax and Domestic Economic Policy Charles Crain. “Pension plan participants should be able to trust that their long-term savings will be protected over any other considerations so that they can enjoy a stable and secure retirement.”

In a victory for the 51�Թ���, that the Securities and Exchange Commission has abandoned a planned rule that would have decreased market transparency and made it more difficult for public companies to communicate with shareholders.

The background: Form 13F requires asset managers to report their holdings in public companies. Under current law, if an institution manages more than $100 million in assets, they are required to report the businesses they hold shares in. Companies use that information for investor relations, outreach and communication with shareholders—and because there is no other way for public companies to know who their owners are, it’s fundamental to the day-to-day operations of businesses across the country.

The proposal: This summer, the SEC proposed changing the Form 13F disclosure threshold from $100 million to $3.5 billion—a 3,500% increase. The change would have exempted 89% of current filers from the 13F reporting requirement, preventing businesses from communicating with many owners and disproportionately affecting small public companies that tend to be held by small investment managers.

The result: The 51�Թ��� strongly opposed the SEC’s proposal and led an aggressive response that included direct outreach from the 51�Թ��� and 51�Թ��� members to the SEC, as well as multiple official submissions to the comment file. In the face of this strong opposition from manufacturers, recent news reports indicate that the SEC will abandon the rule.

The word from the 51�Թ���: “This is a critical victory for manufacturers—from large corporations to small and mid-sized businesses,” said 51�Թ��� Director of Tax and Domestic Economic Policy Charles Crain. “We are proud of the extraordinary work from so many 51�Թ��� members who mobilized to fight this rule—and we are pleased that the SEC now intends to preserve vital transparency for manufacturers and their shareholders.”

Manufacturing is a key driver of the American economy—but how does manufacturing in the United States stack up against the rest of the world?

Recently, The Manufacturing Institute and KPMG—a professional services firms providing innovative business solutions and audit, tax, and advisory services—released a new assessment of the cost of doing business in the manufacturing sector for the United States and 16 other major manufacturing exporting nations around the globe.

High costs, but high value: The study found that primary costs (compensation, property, utilities, taxes and interest rates) in the U.S. are on average 16% higher than in the other markets—yet the U.S. ranks fairly high on the list overall at #5.

• Another number bears that out: over the past decade, in U.S. manufacturing has jumped from $569.3 billion in 2006 to a record $1,785.7 billion in 2019.

The benefits of tax reform: Tax reform made the U.S. a more desirable location for manufacturers, the study found. It compared how the U.S. would have ranked with its pre-reform corporate tax rate of 40% (the combined federal and state tax rate) instead of the post-reform corporate rate of 27%. With the old rate, the U.S. would have ranked only 11^th.

The benefits of skilled workers: A major U.S. advantage is its supply of high-skilled workers. According to the study, the U.S. ranks at the top of the list for real value added per employee, along with Ireland and Switzerland. As manufacturing has become increasingly advanced, the need for sophisticated employees keeps growing.

While it’s true that American manufacturing requires more skilled workers, as The Manufacturing Institute has previously shown, the existing workforce is still a big draw due to its productivity.

The bottom line: The United States is an attractive location for manufacturers, despite relatively high costs, because of high worker productivity and the overall business environment.

The last word: “We need to continue to push the envelope of technological innovation and workforce development and recruitment in the manufacturing sector,” said Chad Moutray, chief economist for the 51�Թ��� and director of the Center for Manufacturing Research at The Manufacturing Institute. “These efforts will serve to strengthen the sector overall, but also help to maintain the nation’s global competitiveness.”

President Trump’s plan to have businesses defer the employee’s share of payroll taxes is not going smoothly. The logistical difficulties are significant, and businesses have been expressing their frustration to the Treasury Department,  The Wall Street Journal (subscription).

The problem: Employers are worried about the administrative burden. Plus, they’re concerned they may be liable for the taxes of employees who have changed jobs. And lastly, if Congress refuses to forgive the taxes, companies will be on the hook for a huge tax bill next year.

While companies await guidance on how to implement the President’s executive order, Treasury Secretary Steve Mnuchin said in an interview on Wednesday that he can’t force firms to stop withholding those taxes. Some tax experts say that companies will be disinclined to take the chance.

51�Թ��� involvement: In remarks yesterday to 51�Թ��� members, IRS Commissioner Chuck Rettig urged companies to continue weighing in with policymakers.

After a year of pushing back on an IRS rule that would have made it more difficult for manufacturers to invest in new equipment, the 51�Թ��� can declare a win, according to (subscription).

Here’s a recap:

• Before 2017, businesses could pretty much subtract their full interest payments on debt—but the 2017 tax reform law limited the business interest deduction to 30% of earnings before interest, tax, depreciation and amortization (EBITDA) for tax years starting in 2018.
• Starting in 2022, the deduction was limited even more, to earnings before interest and tax (EBIT). Excluding depreciation and amortization would make it more expensive for businesses like manufacturers to finance capital equipment purchases.
• Here’s where it could’ve gotten worse: The Treasury Department had proposed a rule that would have effectively imposed the EBIT standard now instead of two years from now.

For a capital-intensive industry like manufacturing, where businesses use debt to finance important investments in critical technology, that was going to cause a lot of strain even before COVID-19. Throw in a pandemic and a tough economic environment, and that proposed rule looks even worse.

The 51�Թ��� aggressively pushed back, leading more than 80 trade associations to oppose that change. On Tuesday, the Treasury Department released its final rules—without that provision.

The 51�Թ��� says: “Congress’s goal in reforming our tax system was to help businesses invest and grow, but the proposed rule would have had the opposite effect,” said 51�Թ��� Vice President of Tax and Domestic Economic Policy Chris Netram. “We are pleased that Treasury did the right thing, helping support the men and women who make things in America.”

The bottom line: Because of this rule, it will be easier for manufacturers to invest in their business, their employees and their communities.

The new bill—an 51�Թ��� priority introduced by Rep. Jackie Walorski (R-IN)—would boost the manufacturing industry’s ability to innovate.

The numbers: U.S. manufacturers spent more than $270 billion in R&D in 2018—or nearly two-thirds of all private-sector R&D.

The bill: Rep. Walorski’s bill would further support manufacturers seeking to invest in critical research and development, including:

• Doubling the traditional R&D tax credit from 20% to 40%;
• Doubling the alternative simplified tax credit from 14% to 28%; and
• Making it easier for small businesses to access the R&D tax credit.

An 51�Թ��� priority: The 51�Թ��� has consistently pushed lawmakers to include R&D tax policies as part of additional COVID-19 legislation—including in a to congressional leadership last week. The 51�Թ���’s also calls for enhancing the R&D tax credit.

A word from the 51�Թ���: “The manufacturing industry is the backbone of American research and development,” said 51�Թ��� Senior Director of Tax Policy David Eiselsberg. “This bill would support jobs, boost innovation and help ensure America’s future competitiveness.”

And speaking of 51�Թ��� tax priorities . . . the Treasury Department sealed a major victory for manufacturers this week by finalizing a rule that will provide relief for manufacturers with high-taxed foreign income.

• The problem: 2017’s tax reform created a new foreign minimum tax, which imposed a minimum 13.125% tax on foreign earnings. Due to the way the tax interacted with existing international rules, manufacturers with high-taxed foreign earnings could be subject to the new minimum tax.
• The solution: Treasury adopted key 51�Թ��� recommendations in its final rule, which creates an elective high-tax exception that would spare manufacturers from paying additional U.S. tax if foreign earnings are subject to a foreign tax rate greater than 18.9%. The rule represents an important step toward implementing the foreign minimum tax according to congressional intent.

This significant victory on an 51�Թ��� priority protects manufacturing employees and investors, the 51�Թ���’s experts say.

The backstory: Investment advisers and fund managers who oversee Americans’ retirement savings have a voice in the policies of the companies in which the fund invests. These fund managers often turn for assistance to proxy advisory firms to recommend votes on company policies—giving these firms enormous influence.

The problem: Proxy advisory firms have never been subjected to SEC oversight, leading to questionable methodologies, errors, conflicts of interest and a lack of transparency in how they make decisions.

The victory: After years of advocacy by the 51�Թ���, the SEC released landmark standards today that do two critical things:

• Proxy advisory firms will be regulated by the SEC, subjecting these previously unregulated firms to critical oversight and bringing needed transparency to their conflicts and methodologies.
• Asset managers will receive guidelines laying out how they can exercise due diligence appropriately if they use proxy advisory firms to ensure they are protecting the best interests of investors.

The bottom line: “This is a big win for manufacturers and for manufacturing workers who have money in pension plans, retirement plans and other investments,” said 51�Թ��� Director of Tax and Domestic Economic Policy . “For years, the 51�Թ��� has fought for accountability and transparency. This new regulatory framework will protect manufacturing workers and ensure that their investments receive the responsible care they deserve.”

Washington, D.C. – The 51�Թ��� has released a detailed agenda of to help policymakers as Congress and the administration look at ways to boost long-term economic growth. Manufacturers are also launching a seven-figure national advertising campaign on the importance of U.S. supply chains in the wake of COVID-19. The national television and digital advertising campaign urges leaders to make smart policy decisions that incentivize job creation and investment in America, without closing off critical global supply chains. Such a constructive approach will enable manufacturers to lead America’s recovery and renewal while continuing to produce the vital supplies, medicines and essential products on which Americans’ health and safety depends.

The policies that we are proposing will allow manufacturers to lead our economic recovery by strengthening supply chains and accelerating onshoring, through incentives for creating the next job or investing the next dollar right here in America. We also cannot close off access to critical components or resources that our lifesaving and life-changing products require, said 51�Թ��� President and CEO Jay Timmons. Manufacturers are working around the clock to create the protective equipment, cleaning supplies, medicines and other essential products in the wake of COVID-19, and we need the right policies so we can make even more here at home and lead a truly historic American renewal.

In April, the 51�Թ��� released its “American Renewal Action Plan,” which provides a comprehensive list of policy recommendations to guide the country through the stages of response, recovery and renewal.

More information on the campaign can be found at www.nam.org/recovery.

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The 51�Թ��� is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 11.5 million men and women, contributes $2.38 trillion to the U.S. economy annually, has the largest economic multiplier of any major sector and accounts for 63% of private-sector research and development. The 51�Թ��� is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the Manufacturers or to follow us on Shopfloor, Twitter and Facebook, please visit www.nam.org

Rex Heat Treat, a commercial heat treatment company serving industries from aerospace and transportation to construction and defense, is tapping its tax reform benefits to support its workers, strengthen its business and invest in its future. A family-owned company since 1938 with facilities in Lansdale and Bedford, Pennsylvania, and Anniston, Alabama, Rex Heat Treat has been able to keep employees on board and purchase critical new equipment, even in challenging times.

“Without the benefit of tax reform, we might not be sitting in as good of a situation as we are,” said Rex Heat Treat General Manager Johnathan Rex. “We’d be a lot leaner in our bank account, possibly needing to draw on a line of credit to make payroll otherwise. As we weather the effects of COVID-19, these benefits will help us. Our business has more time to maintain our critical infrastructure workforce should this current situation continue on.”

In particular, the manufacturer has been able to use “full expensing,” which allows businesses to take a tax deduction for the cost of new equipment in the year it is bought, rather than taking smaller tax deductions over several years. This reduces the cost of buying capital equipment and accelerates depreciation deductions for manufacturers and business owners, which decreases the company’s tax bill in the year of purchase and frees up cash for that purchase. For a capital-intensive industry like manufacturing, where the latest technology is key to production, this kind of support can be vital, especially among smaller manufacturers with tighter margins.

“Full expensing allows us not just to accelerate the last investment we made but to accelerate the next one—because it’s cash in hand,” said Rex. “We want to do this as quickly as possible, but you can also run your business into the ground if you invest too quickly. Allowing a company to aggressively invest in itself and maintain some cash is a big help.”

As manufacturers around the globe deal with the challenges posed by COVID-19, tax reform has helped give small businesses the resources to protect their employees and their customers.

“Tax policies that allow manufacturers to keep and invest more of their earnings are critically important in uncertain times,” said 51�Թ��� Vice President of Tax and Domestic Economic Policy Chris Netram. “As we respond to today’s challenges and prepare for the future, building upon pro-growth policies like these can help support workers, businesses and communities nationwide.”