Though they use many of the federal tax credits on the books, NMMA member companies in a survey overwhelmingly say they are willing to trade some benefits in order to simplify taxes.
Bonus depreciation and R&D tax credits are the tax benefits members use most, according to the survey conducted by the National Marine Manufacturers Association.
All of these programs relate to investments in new products and production methods, and that demonstrates that marine manufacturers are investing to remain innovative and competitive, the NMMA said.
The NMMA surveyed members to advocate for tax benefits as U.S. House Republicans release their blueprint for tax reform. Overwhelmingly, NMMA members seek a reduction in their overall tax obligation, even at the expense of eliminating certain deduction programs.
This was reconfirmed on several questions, as manufacturers overwhelmingly desire a reduction in the complexity of the tax code and lower tax rates in return for giving up some deductions.
There was very little support for a “territorial” system for foreign-sourced income or shifting to a European style value-added tax system.
Current proposals in the House Republicans’ blueprint call for reducing the top individual tax rate from 39.6 percent to 33 percent, the top business pass-through rate to 25 percent from 39.6 percent and the top corporate tax rate to 20 percent from 35 percent.
NMMA members would welcome the proposed immediate write-off of business investments, likely even at the expense of forgoing the deductibility of interest expense in most situations.
In the end, although NMMA members do take advantage of a number of deductions in the tax code, they are open to eliminating many of them in return for a reduction in complexity, fewer compliance burdens and lower tax rates.
As the NMMA continues to engage in discussions with congressional tax committees about tax reform, the association is armed with the knowledge that there is a willingness to give up specific deduction benefits in exchange for reduced rates.
Repeal of the estate tax, which marine industry businesses widely support, and preservation of the mortgage interest deduction are also being considered, although the mortgage interest deduction on second homes and boats might be limited to the interest on $500,000 of principal.
Most of the feedback that the NMMA has received from the industry indicates a willingness to give on the mortgage interest deduction on second homes in return for lower tax rates and reduced complexity.
Survey respondents closely mirror the NMMA’s membership, with 92 percent of respondents classified as small businesses (fewer than 500 employees) and the majority having fewer than 50 employees. Fifty-seven percent have sales of less than $10 million a year.
The NMMA heard from the public and mostly private companies in its membership. More than half of the respondents were S-corporations, and slightly more than half export their products. There were members from 33 states; Florida had the largest representation among the respondents.
