NC Workers Hurt Most by Biden's Made in America Tax

Dear Friend,

Over the past year and a half since Democrats won the two Georgia U.S. Senate seats that gave them majority in that chamber, Speaker Pelosi and Majority Leader Schumer have gone full speed ahead with their nonstop tax, spend and dictate agenda. In March of 2021, they spent nearly $2 trillion of taxpayer funds on the "American Rescue Plan," despite warnings from leading economists — including notable Democrats — who said it would fuel inflation. Just recently, they passed a $745 billion tax-and-spend package titled the "Inflation Reduction Act" that President Biden signed into law last week. Just like the Affordable Care Act (Obamacare) had the opposite effect of its title for most in the country, this bill will do nothing to tame inflation and will likely help keep high inflation around for longer.

While there are a number of reasons the so-called "Inflation Reduction Act" is a bad bill, perhaps one of the worst parts of the bill is that it raises taxes on small businesses and manufacturers who will be targeted by a 15% corporate minimum tax, also known as the Made in America Tax or "book minimum tax."

What is the Made in America Tax?

What it does: The Made in America Tax creates a 15% minimum tax on financial statement or “book” income. This new minimum book tax will increase taxes by about $225 billion for American businesses in the midst of a recession, hitting manufacturing the worst.
Loopholes: Special carveouts will go to fund Green New Deal mandates and union pensions paid for with your tax dollars, and semiconductor tax credits. Democrats also used a Senate amendment to impose a new tax increase on small business called “pass-through loss limitation,” while protecting the State and Local tax deduction which benefits the very wealthy in high-tax states the most.

Who is Impacted by the Made in America Tax?

Southeastern North Carolina’s small businesses are the lifeblood of our economy, generating the revenue that provides for thousands of jobs while giving back to the local community every step of the way.

Last week, I heard directly from a cross section of small business owners in North Carolina's 7th District during a roundtable discussion. We had a great conversation about the issues important to them. Much of it focused on the challenges they face in the current economy, including labor shortages, supply chain disruptions, and record high inflation driving up their costs. Some of these employers will soon face a new hurdle with the 15% Made in America tax while most of the others may find themselves negatively affected by the new pass-through loss limitation.

Meeting with NC-07 business roundtable participants.

Based on recent analysis from the nonpartisan Joint Committee on Taxation, U.S. manufacturers will bear 49.7% of the book minimum tax at a time when they are already struggling with inflation, high fuel costs, and supply chain disruptions. Due to North Carolina's large manufacturing base, workers in our state would endure some of the largest hits from the new tax.

Despite Democrats’ claims they are only targeting large corporations, the burden of these harmful tax increases will be carried by working families in the form of higher prices, fewer jobs, more outsourcing to other countries, and lower wages.

Bottom Line

At a time when America faces record-high prices, supply-chain disruptions, a lack of workers, and a recession, now is not the time to increase burdensome taxes that overwhelmingly affect U.S. job creators. It will make supply chain challenges worse and harm working families.

To create jobs and lower inflation, we should be incentivizing companies to manufacture more products in America, not less. You get less of what you tax and disincentivize. Now’s not the time for fewer jobs, fewer workers and less production — the natural outcome of tax increases on businesses large and small. This will only prolong inflation.