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Tax System Must Reflect Importance of American Manufacturing

WASHINGTON (November 2, 2017) – The American Chemistry Council (ACC) issued the following statement in response to the release of tax reform legislation by House Ways and Means Committee Chairman Kevin Brady (R-Texas).

“We commend Chairman Brady for taking this important step toward modernizing our nation’s tax code. We strongly encourage enactment in the 115th Congress of a fair, simpler and internationally competitive system that promotes American economic growth and new jobs. We look forward to a careful review of the legislation using our guiding principles for tax reform as our yardstick.

“Chemistry is an advanced manufacturing industry and essential to our economy. We provide 811,000 skilled U.S. jobs and account for 14 percent of the nation’s exports. Over 25 percent of U.S. GDP is generated from industries that rely on chemistry, from agriculture and electronics to textiles, vehicles, and energy-efficient materials used in building and construction.

“Thanks to the development and availability of domestic shale gas – a key source of energy and feedstock for chemical manufacturing – we are in growth mode: Since 2010, chemistry companies have announced $185 billion in new investment to build or expand facilities in the U.S. Fully 62 percent is foreign direct investment. In 2016, the chemical industry accounted for 48 percent of all manufacturing construction spending, outpacing transportation and health care.

“Chemical industry investment will help grow our economy, create jobs and improve living standards, but fully realizing the opportunity will require reliable access to new capital and a more globally competitive tax system. For companies considering further investment, a significant concern is the future of tax provisions that underpin multi-billion dollar investments.

“We believe business tax reform must recognize the importance of American manufacturing and the jobs it creates. We support a substantial rate reduction to reflect rates at least comparable to OECD averages, a competitive territorial system and transition rules that avoid financial dislocation, contraction or reduction in jobs. Reform should produce a more level playing field for U.S. and foreign companies when they invest at home or abroad.

“Since deemed repatriation of historical foreign earnings is included in the reform package, lawmakers must enact a reasonable, bifurcated rate – one with a substantially lower rate for earnings reinvested in plants and equipment than for cash/cash equivalents. We support permanent reform in order to drive sustained economic growth in the 21st century.

“We urge policymakers to take advantage of this once-in-a-generation opportunity to enact comprehensive tax reform. The decisions Congress makes will be critical to ensuring a strong and competitive American manufacturing sector and chemical industry for the long term. We look forward to being a resource and working with lawmakers to develop and enact reform.”

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