On August 4th, GCCA joined an effort led by the National Association of Manufacturers and supported by over 130 national and state industry organizations expressing opposition to the inclusion of a tax on the financial statement income of certain businesses (“book tax”) in H.R. 5376, the “Inflation Reduction Act” reconciliation legislation. Economic analyses demonstrate the harmful impact of this provision. The nonpartisan Joint Committee on Taxation found that nearly 50% of the burden of this tax would fall on manufacturers. The National Association of Manufacturers found that in 2023 alone this would result in 218,108 fewer jobs, reduce real GDP by $68.45 billion and decrease total wages by $17.11 billion. Accelerated depreciation – the ability to recover the cost of acquiring an asset over a short time span, sometimes as soon as the year of purchase – has been in the tax code in some form since at least 1958. This policy encourages companies to invest in capital assets, like machinery and equipment, that power long-term economic growth. But unlike the tax code, the financial accounting rules upon which a book tax is based require depreciation over the useful life of an asset. As such, a book tax would effectively eliminate this long-established incentive to invest in the United States.
