Opening Statement at Hearing on Tax Reform and the U.S. Manufacturing Sector

Jul 19, 2012


Opening Statement of Ranking Member Sander Levin

Hearing on Tax Reform and the U.S. Manufacturing Sector

(Remarks as Prepared)

During the last decade, we experienced a crisis in manufacturing employment.  During the eight years of the Bush Administration, we lost 4.5 million manufacturing jobs. 

Now, since the recovery has taken hold, the manufacturing sector has added about half a million jobs.  We’ve seen that gain in manufacturing employment over the last two years, and we hear talk about a resurgence of American manufacturing in part because of the policies of this President. 

This President took the difficult but vital step of providing assistance to the domestic auto industry.  If he hadn’t done that, it would have devastated the manufacturing sector well beyond the Big Three and even beyond their suppliers.  

The Recovery Act included key provisions like the 48C credit to encourage investment in advanced energy manufacturing.  The tax agreement at the end of 2010 included 100 percent bonus depreciation for capital investments.

But more needs to be done.  We are still below where we were at the end of the Clinton Administration by about 5 million manufacturing jobs.

Ways & Means Democrats have introduced a “No Excuses” agenda of items like bonus depreciation, the wind credit, R&D, 48C, BABs and a provision to reduce the incentive to ship jobs overseas that this committee should act on immediately to promote job creation, especially in the manufacturing sector.  This committee should act on these provisions as soon as possible.

With respect to the longer term challenge of tax reform, the Chairman has said he wants a 25 percent top rate and a territorial system without giving any indication of how he would pay for it – even though we know that eliminating every corporate tax expenditure, including the domestic manufacturing deduction, R&D and accelerated depreciation would not pay for reducing the corporate rate to 25 percent.  Witnesses today make clear these provisions are important to their businesses. 

The Republican view is that lower rates are the goal of their tax reform. Theirs is a philosophy that says cut taxes, cut every kind of spending, get rid of any kind of safety net, end all investment in public goods like roads and education, even if they are vital to business.  

The President and Democrats in Congress view the larger goal as economic growth and job creation.   Just setting a rate and not saying how you will get there doesn’t really tell you whether you are achieving those goals or not.

We think manufacturing should be at the heart of our goals for tax reform.  Manufacturing still provides millions of middle class jobs, conduct more than two-thirds of private R&D, accounts for 60 percent of exports and has vital positive spillover effects in the broader economy.

Secretary Geithner said this very well before this committee in February.  He said, “I would say we would look at any proposal through that simple test, which is relative to what you face today, are we making it more likely that that next factory by a U.S. or a foreign company is built here?”

Republicans like to say that’s picking winners and losers.  It is not picking winners and losers, but it is picking sides.  We’re on the side of those that want to build things in America.  Republicans like to talk about “competitiveness.”  The competitiveness we worry about is the competitiveness of our communities and our workers when that next plant is being built. 

That’s what we think tax reform needs to mean for the manufacturing sector, and I look forward to hearing our witnesses’ thoughts on how we achieve it.