Washington, DC, March 15, 2007--In testimony before the House Ways and Means Committee, a representative of the National Association of Manufacturers urged House tax-writers to avoid imposing new taxes on manufacturers, making it more difficult for them to compete in the global marketplace.
At the hearing—which focused on revenue-raisers in the Senate-passed minimum wage bill—Ken Petrini, vice president of taxes at Air Products and Chemicals, Inc and chairman of the NAM’s Tax and Budget Policy Committee warned of the potential impact of “overly broad” provisions “that threaten to ensnare transactions and expenses well beyond their intended scope.”
Noting that manufacturers currently face some of the highest legal costs in the world, Petrini told the Committee that “proposals to eliminate tax deductions for punitive damages and settlements of potential violations of law will only increase the cost of doing business in the United States. American consumers and businesses would lose if the provisions on punitive damages and settlements are adopted.”
Petrini also raised objections to new proposed limits on nonqualified deferred compensation plans, which are used by manufacturers to align worker and management interests. “The proposal, which is not targeted at any abuse of deferred compensation, is a solution in search of a problem that would effectively eliminate the ability of employees to use deferred compensation as a retention tool,” he said.
Turning to another Senate proposal that would de-link securities law from the tax code with regard to the deduction and disclosure of executive compensation, Petrini noted that “this change would create unintended ambiguities in the law because of the different definitions used by the SEC and IRS. Keeping the securities laws and the tax code linked will allow for easier administration of salary deduction allowances and compensation disclosures.
“NAM members strongly believe that tax relief will go a long way to ensure continued economic growth,” Petrini said. “In contrast, revenue raisers, like the ones discussed today, will negate much of the positive impact of tax relief.”
