U.S. Sens. Rob Portman (R-OH), Debbie Stabenow (D-MI), and Sherrod Brown (D-OH) introduced a bill that clarifies the domestic manufacturing tax deduction for U.S. manufacturers.
The Promoting More American Manufacturing Jobs Act clarifies the Domestic Manufacturing Deduction (DMD) to the Internal Revenue Code.
While application of the DMD to fully integrated manufacturers is relatively clear, the IRS has implemented regulations relating to the domestic manufacturing deduction that does not benefit most U.S. manufacturers that rely on contract manufacturing, even though both types of domestic manufacturers make similar contributions to U.S. job creation. The bill would eliminate the unfair different treatment of manufacturers with vertically integrated and non-vertically integrated supply chains.
“This legislation will help ensure our tax code encourages good-paying manufacturing jobs right here in the United States,” Portman said. “The IRS’s interpretation of the section 199 regulations has resulted in unnecessary disputes and litigation between the IRS and contract manufacturers and, as a result, it has diminished the law’s intended purpose of promoting more American manufacturing. This bill will end those disputes so that businesses can get back to focusing on creating more jobs.”
Stabenow called it a “common sense” change that will encourage manufacturers to create more jobs. “We don’t have an economy or a middle class unless we make things and grow things,” Stabenow said.
Brown said U.S. manufacturers should be rewarded for providing American jobs with good benefits.
“This simple fix will promote job creation by making sure American manufacturers can get the tax deduction they need to grow,” Brown said.