Reduced Tax Incentives Will Lead to Less Retirement Security

Retirement security requires planning, commitment and investment over many years. Employer-sponsored retirement plans provide a framework for those efforts, thanks to many features and protections that make them attractive to employees and employers. But quite apart from the essential role that retirement plans play ensuring income security, is an indisputable fact: they constitute a large pool of investment capital in our country, which is indispensable to economic growth. According to the Federal Reserve Flow of Funds Accounts, as of the 4th quarter of 2013: households owned retirement assets totaling $19.6 trillion, excluding Social Security. For comparison’s sake, corporate equities totaled $13.9 trillion in that same period. Reducing incentives for these plans could erode their value to the detriment of both the retirement security of an aging population and an economy that has yet to adequately create jobs. It is against this background that the comprehensive tax reform draft (“Draft”) unveiled recently by House of Representatives Ways and Means Committee Chairman, Dave Camp (R-MI), deserves attention. Chairman Camp is to be applauded for recognizing that tax code changes are needed to allow individuals and businesses to prosper. But given the imperative to help Americans achieve retirement security and the reality that…

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Tax Reform Must Foster Jobs, Economic Growth, and Competitiveness

With comprehensive tax reform on the Congressional front-burner, paper and wood products manufacturers are educating lawmakers on the tax profile of the industry and the possible effects of wholesale reform of the tax code. Our priority is to ensure that any changes result in improved economic growth, job opportunities and the competitiveness of U.S.-based forest products businesses. The U.S. forest products industry accounts for approximately 4.5 percent of the total U.S. manufacturing GDP. Our companies produce about $200 billion in products annually and employ nearly 900,000 men and women, exceeding employment levels in the automotive, chemicals and plastics industries. They meet a payroll of approximately $50 billion annually and rank among the top 10 manufacturing sector employers in 47 states. Our companies and their business structures take many forms including C-Corps, S-Corps, partnerships and others. Our industry is capital-intensive and operates in a highly competitive international marketplace. Comprehensive business tax reform should allow for economic growth and improve the competitiveness of important job-creating sectors, including the U.S. forest products industry. Between 2006 and 2011, our industry has invested $52 billion in new equipment and production capability We are leaders in the field of renewable energy, generating electricity and other usable…

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Tax Reform Must Encourage, Not Hinder, Capital Formation

As Congress continues to examine comprehensive tax reform, the nation’s investor-owned electric companies are working to educate lawmakers and the Administration about the impact that certain changes to the tax code—particularly changes affecting dividend tax rates and the deductibility of interest expense—could have on our industry’s ability to raise capital. Today, the electric power industry is investing for the future. Our sector has both the highest capital-intensity and absolute capital spending levels of all U.S. industrial sectors, with the industry’s capital expenditures reaching a record $90.5 billion last year alone. Looking ahead, we plan an average annual investment of approximately $85 billion through 2015. These investment dollars are creating a cleaner generation fleet and are enabling the industry to meet a wide variety of new environmental requirements. They are developing a smarter, more flexible, and more resilient grid to meet the growing demands of our digital society. They are also promoting increased electrification, particularly in the transportation sector to improve air quality and reduce our nation’s foreign oil imports. Importantly, these capital investment programs offer a critical source of much-needed, high-quality job creation in many states. Dividend Tax Rates Earlier this year Congress passed the “American Taxpayer Relief Act.” One…

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Difference in Effective Corporate Tax Rates and Tax Reform: What Does it Mean for Different Industries?

At a recent event sponsored by the American Council for Capital Formation, I had the opportunity to brief those present about the effective corporate tax rate for my employer, Con-way Inc., a Fortune 500 Trucking and Logistics Company. Our effective rate approaches 40% (which includes federal, state and foreign income taxes) and is similar to that of our competitors. As I listened to other industry representatives speak about effective corporate tax rates in their various industries, it dawned on me that the difference in effective corporate tax rates can result in capital flows into industry sectors much like the difference national corporate tax rates have on capital flows between nations. Up to this point, much of the discussion of corporate taxes has focused on the difference between worldwide tax rates and how capital flows tend to gravitate towards countries where returns on investment are enhanced by lower corporate taxes. If the global competition for capital is real, then it stands to reason that competition among industry sectors for capital is real as well. Much of the difference between industries is in some ways inadvertent – the cumulative result of years of tax policy changes. This greatly increases the complexity of…

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Manufacturing Renaissance

Who would have dreamed a decade ago that oil and natural gas would become the impetus for American energy security and a revitalized manufacturing sector? Who would have imagined that OPEC members would be meeting to discuss the U.S. shale revolution and its impact on their economies Yet, without question, the worldwide energy picture has changed dramatically in recent years. The United States, once resolved to dependency on – and some would say subservient to – foreign governments to meet our energy needs, is on a path to becoming an energy super power. Continued investments in new technologies and processes like hydraulic fracturing, advanced imaging and horizontal drilling are unlocking new energy sources, creating jobs and the prospect of revitalizing the American economy in the process. Supplies of oil, natural gas and natural gas liquids (NGL) from shale development are leading to record-breaking volumes of fuel and raw material that carry enormous opportunities for the nation. In just 2009 alone and amidst a crippling recession, the oil and natural gas industries added an estimated $1.1 trillion to the U.S. economy, the equivalent of eight percent of GDP. And for every job created through oil and natural gas production, three additional…

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