Smith, Morelle, and Hern Champion Passage of Legislation to Support Manufacturing Investment
Washington, D.C. – Today, Reps. Adrian Smith (R-NE), Joe Morelle (D-NY), Kevin Hern (R-OK), and Brad Schneider (D-IL) voiced their support for American Innovation and Manufacturing (AIM) Act language passed as part of the bipartisan Tax Relief for American Families and Workers Act (H.R. 7024) which will promote investments in America's manufacturing sector and other capital-intensive industries. The legislation would amend the U.S. tax code to increase the cap on deductible business interest to pre-2022 levels.
The members released the following statements:
“The need to ensure our tax code reflects the cost of doing business is urgent, as Americans continue to deal with recent high inflation and higher interest rates,” said Rep. Smith. “By ensuring capital-intensive industries can fully deduct the cost of interest from their taxes, this legislation enhances opportunity to develop new products in America, create jobs by making those products here, and then sell those products around the world. I thank Reps. Morelle, Hern, and Schneider for their cooperation and leadership in this effort.”
“I’m proud to have delivered on my promise to uplift our local manufacturers and end a harmful tax hike,” said Rep. Morelle. “Our legislation will permanently preserve the previous earnings before interest and taxes formula, allowing for a greater investment in manufacturing firms across the country and strengthening the backbone of our economy. I’m grateful these important provisions were included in the bipartisan Tax Relief for American Families and Workers Act, and I look forward to continuing to work with Congressman Adrian Smith and all of my colleagues to enact solutions like this that support our manufacturing sector.”
“Interest rates are high, making the cost of capital and investment more expensive. To make matters worse, the new stricter interest deductibility limitation on businesses will fall on the American worker through lower wages and fewer jobs. The increased limitation on interest deductibility makes American business less competitive in the global marketplace,” said Rep. Hern. “I’m pleased to see the American Innovation and Manufacturing (AIM) Act language passed as a part of the bipartisan Tax Relief for American Families and Workers Act. These important provisions to reverse the stricter standard and empower American job creators are critical to the manufacturing industry.”
Prior to 2022, businesses could deduct 30 percent of earnings before interest, tax, depreciation, and amortization—a deduction standard known as EBITDA. A change in the tax code limits the deduction to only EBIT – excluding depreciation and amortization. This presents an added cost for businesses often required to take out loans to finance large capital investments in their facilities and equipment, which would have a disproportionate impact on the manufacturing sector of our economy and could harm its competitiveness in the global market. The AIM Act language included in H.R. 7024 would restore the full EBITDA standard for deductions through 2025.
