NATIONAL ASSOCIATION OF MANUFACTURERS END OF THE YEAR TAX UPDATE

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1 Wednesday December 17, PM Central Time NATIONAL ASSOCIATION OF MANUFACTURERS END OF THE YEAR TAX UPDATE Carolyn Lee Senior Director, Tax Policy National Association of Manufacturers CLee@nam.org Chris Kramer Partner BKD, LLP ckramer@bkd.com To Receive CPE Credit Participate in entire webinar Answer polls when they are provided If you are viewing this webinar in a group o Complete group attendance form with Title & date of live webinar Your company name Your printed name, signature & address o All group attendance sheets must be submitted to training@bkd.com within 24 hours of live webinar o Answer polls when they are provided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days of live webinar 1

2 Primary Current Business Challenges, Fourth Quarter 2014 Rising health care/insurance costs Unfavorable business climate (e.g., taxes, regulations, government Attracting and retaining a quality workforce Weaker domestic economy and sales for our products Rising energy and raw material costs for our products Weaker global growth and slower export sales 33.4% 30.6% 26.8% 63.4% 56.7% 77.1% Challenges with access to capital 5.4% Source: NAM/Industry Week Survey of Manufacturers Note: Respondents were able to check all that apply. Therefore, responses exceed 100 percent. 2

3 Top Tax Policy Issues The Extenders Tax Reform The Extenders Sec. 179 Look-Through Bonus Depreciation Active Financing PTC R&D Credit 3

4 Senate Finance The Extenders Approved $85 Billion Package 4/3/14 Included 50+ provisions 2 Year Extensions (through 2015) Not offset Stalled on Senate Floor in May on procedural issues The Extenders House Ways and Means Approved permanent extensions for a few extenders, including: R&D Credit Sec. 179 Expensing Bonus Depreciation House passed these with bipartisan votes 4

5 Status The Extenders Lame Duck Action = Lowest Common Denominator Discussion of making some permanent failed Package expires again 12/31/14 Tax Reform Cost Recovery Base-Broadeners Pass-throughs R&D permanent International Competitive Simpler, Fairer Lower Rates 5

6 Driving Forces Tax Reform Complexity Highest Corporate Tax Rate Uncompetitive International Tax System Temporary Tax Provisions Inversions Concern about debt/deficit Tax Reform Manufacturers Priorities Corporate Tax Rate of 25% or lower Robust Capital Cost Recovery Competitive, Modern International Tax System Permanent Lower Rates for Pass Throughs Permanent and Strengthened R&D Credit 6

7 Tax Reform Tax Reform Act of 2014 Released by Chairman Camp in February Corporate and Individual Reform Discussion Draft Solicited Input from Taxpayers Included Legislative Text Tax Reform Tax Reform Act of 2014 Highlights Top corporate tax rate of 25% Permanent R&D Credit Move to a territorial tax system Lower rate for small manufacturers Repeal of the medical device tax 7

8 Tax Reform Tax Reform Act of 2014 Base Broadeners Longer Depreciation System Amortized Advertising Expenses (50/10) LIFO Repeal Phase-out of Sec. 199 Repeal of Like-kind Exchanges Amortized R&D Expensing (5 years) Hurdles to Tax Reform Economic growth (R) v. Revenue (D) Comprehensive v. corporate only Winners v. Losers Baselines Transition Add-ons? 8

9 Possible Triggers for Tax Reform Revenue Needs in 2015: March: Doc Fix Spring/Early Summer: Debt Ceiling May: Highway Trust Fund Expires September: FAA Reauthorization Moving Forward in 2015 New Committee Leadership Finance: Sen. Orrin Hatch (R-UT) Ways and Means: Rep. Paul Ryan (R-WI) Results of the Fall Election Role of the Administration Business-only Reform 9

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11 QUESTIONS? THANK YOU! Carolyn Lee Chris Kramer

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