The Trump administration is working to bring manufacturing back to the U.S.—an agenda that will foster economic opportunity and create more dependable supply chains. As a small business owner that supports manufacturing in places like Indiana, North Carolina, and the territory of Puerto Rico, a government that prioritizes “Made in America” is a breath of fresh air.
But not all policy strategies aimed at attracting more business investment to the U.S. would be equally effective. The White House should consider its options.
For one, aggressive tariffs on imported goods is not a long-term solution. What happens when the next president is elected to office and reverses course? Not only are the short-term gains lost, but businesses experience whiplash. And the American economy needs certainty to thrive. The bottom line is that tariffs should be limited to a negotiating tactic.
A better policy alternative that would usher in a lasting American manufacturing Golden Age is smart tax reform that helps the U.S. strengthen supply chains of critical goods like semiconductors, medicine, and personal protective equipment—areas in which we are currently vulnerable.
What do manufacturing hubs like China, India, or Taiwan have in common? It’s cheaper to do business. While lowering the bar on labor standards or regulatory protections is a nonstarter for the modern American economy, the U.S. does have the opportunity to compete on taxes. The ball is already rolling in the right direction.
As part of the 2017 Tax Cuts and Jobs Act passed into law during the first Trump administration, the corporate tax rate—which then stood at one of the highest in the world—dropped to 21 percent. But we can do better. Some countries are still eating our lunch, and the ongoing budget reconciliation process being debated in the House and Senate provides an opportunity to get the job done.
President Trump has proposed lowering the U.S. corporate tax rate further to 15 percent for domestic manufacturing, and other provisions like extending the 20 percent small business deduction would directly help companies like mine. Congress has until the end of the year to get the package over the finish line.
As a complementary strategy to attracting manufacturing to places like Ohio, North Carolina, or Texas, a tax code that encourages near-shoring would add another layer of protection. The U.S. can, for example, keep the economic environment competitive in Puerto Rico by attracting manufacturing that could otherwise end up in India or China.
The American territory is already home to vibrant biopharma and medical device industries and has the human capital and infrastructure to build out capacity. I’ve seen firsthand how Puerto Rico has bloomed into a manufacturing hub that contributes greatly to America’s economy.
Our small business employs more than three dozen specially trained engineers on the island who work hand-in-hand with counterparts in the continental U.S. Not only does the dynamic keep supply chains of critical medicines closer to home but businesses are not subject to nefarious governments like China, which condone unethical practices like intellectual property theft.
As a small business owner supporting U.S. manufacturing, the “Made in America” agenda of the Trump administration is more than welcome. But rather than settle for short term wins, let’s push for lasting change. Modifying the tax code to better attract and retain investment closer to home is the best path forward.
Rick Straw is the chief executive officer of PACIV, an automation engineering firm that supports pharmaceutical manufacturing. He lives in the Indianapolis metro area.
Original article: https://www.ibj.com/articles/advance-made-in-america-agenda-with-tax-cuts