“We need a tax system that puts American manufacturing on a level playing-field with the rest of the world,” and Trump’s proposed changes are “our best opportunity in 30 years,” Pamela Bailey, president and CEO of the Grocery Manufacturers Association, said in a statement.
The Food Marketing Institute agrees that the framework Trump released Sept. 27 is an “essential first step toward addressing the inequities and distortions in the current tax code,” according to a statement.
Under the current tax system, many American-based manufacturers are subject to a marginal tax rate of at least 39% that GMA argued in a letter it sent to Trump Sept. 21 “limits their ability to be competitive internationally.” In the letter, it added, “we need a tax system that puts American manufacturing on a level-playing field with the rest of the world.”
The trade groups believe Trump’s proposal would do that by slashing the corporate tax rate to 20% from 35%. It also would create a new tax rate of 25% for so-called pass-through businesses, which cover mom and pop shops and giant corporations alike. These business are currently taxed at the same rate as their owners.
“These lower rates will help accomplish the broader goals – shared by the negotiators, President Trump and the food retail industry – of creating jobs and driving economic growth in the sector, while also helping to guarantee that Americans continue to have the safest, healthiest and most affordable food supply in the world,” Andrew Harig, the senior director of sustainability, tax and trade form FMI, said in a statement.
GMA agrees that he reform will achieve these goals by fueling “consumer purchasing power and business investments in innovation, which will generate more job growth.”
It adds that the food, beverage and consumer products industry is already one the largest employment sector in the US with more than 2.1 million jobs in 30,000 communities in the US.
FMI suggests the tax reform also will provide relief in terms of potentially allowing businesses in the industry to operate at higher annual profit margin than the current average of 1%.
With so many benefits, FMI urges Congress “to move expeditiously to create significant, last reform that focuses on lowering effective rates, creating tax parity among all industries and simplifying the complexity that hinders job growth.”