Want to Create Jobs? Here’s One Tax We Can Easily Eliminate

GARY SALAMIDO

While April saw modest growth in jobs numbers, millions of Americans are still looking for work in an economy that hasn’t fully recovered.  As is always true in times of economic malaise, the manufacturing industry is one of the hardest hit. This comes on top of a long-term decline in our nation’s manufacturing base, which has dropped from 28 percent of gross domestic product in the 1950s to a mere 12.5 percent today.[1] Congress should be doing everything it can to remove the obstacles that put our manufacturers at a disadvantage in the global marketplace, and one thing it can do right away is extend the Miscellaneous Tariff Bill.

The Miscellaneous Tariff bill (MTB) —which reduces tariffs on critical raw materials used to make agricultural and industrial products – expired at the end of 2012. Tariffs are simply taxes collected at the border.  So MTB’s expiration was effectively a tax hike targeted at manufacturers at a time they can least afford it.

It’s been over 500 days since the MTB expired, costing American companies over $850 million dollars and harming our competitiveness. [2] It costs businesses in North Carolina over $50 million per year.[3]  Lost income means lost wages and decreased potential for job creation.

Manufacturing is critically important to our state, contributing 20% to our GDP and comprising over 80% of our foreign exports.[4]  In North Carolina alone, MTB relief supports over 6,000 jobs.[5]  Our country – and our State — certainly can’t afford to pass up any jobs. MTB tariff relief could bring thousands back into the workforce.

It’s important to keep in mind that MTB tariff relief isn’t about giving one industry or company a leg up on another.  The materials that would be exempt from tariffs are not produced here in North Carolina or anywhere in the United States. Not a single American manufacturer is put at a disadvantage by lowering these import costs, and any domestic company that believes its business will be hurt has an open-comment period to voice their concern for any individual bill requesting tariff relief.  Usually, it only takes one objection to kill a suspension.

The MTB simply reduces the tariff-taxes to companies importing goods they can’t find here in the U.S., increasing their ability to compete on a global scale.  The last thing our economy needs right now is another tax – especially one that may encourage U.S. manufacturers to move their businesses elsewhere.

No wonder MTB bills have long enjoyed widespread bipartisan support and no opposition.  So why is a renewed MTB languishing in Congressional purgatory?  It seems some mistakenly believe MTB tax cuts constitute an earmark.

Congressional opposition to earmarks is laudable.  It is designed to keep in check special interest favors that only increase the deficit.  But the MTB isn’t about special interests, and it requires no additional spending.  MTB tariff-tax cuts help broad segments of industry and support the jobs of thousands of workers. And by limiting the tax burden to manufacturers, MTB tariff-tax cuts increase economic growth for all Americans.

In the end, Congress has the power to use the MTB as smart tax policy that fairly supports the U.S. economy. That’s why it is so surprising that they have not taken action. This has resulted in the expiration of thousands of temporary tariff reduction measures, with U.S. companies paying millions in additional taxes.

And there is a very real impact right here in North Carolina.  We are the proud home to a wide variety of cutting edge companies and manufacturers that employ thousands in state and invest billions in research and development.  Many of these businesses rely on the MTB to keep costs down on necessary imports.  Without tariff relief, the impact of millions spent on additional tariff-taxes will surely be felt throughout the value chain.  We need jobs to stay right here in our state.  We need to maintain our status as global leaders in R&D.

MTB presents an opportunity for both parties to demonstrate that they can work together and get something important done. We’ve been waiting for over a year. We should end the wait as soon as possible and make it a little easier for our manufacturers to create and maintain jobs for our citizens.

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[2] Economic study

[3] Numbers from IBGC – 151 NC Bills valued at 1M per over 3 years.

[5] Economic study (151 provisions, up to 40 jobs per provision)

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