Washington, D.C. – Failing to preserve pro-manufacturing tax policies from the 2017 tax reform will cost the U.S. economy nearly 6 million jobs, according to a landmark EY study released by the National Association of Manufacturers. Inaction would cost the U.S. economy more than $1 trillion. The study also shows that the manufacturing industry will bear the brunt of this economic damage if Congress does not act swiftly in 2025.

“The time to act is now. Millions of American workers are depending on the manufacturing sector to continue driving America forward,” said NAM President and CEO Jay Timmons. “Pro-growth tax policies from President Trump’s 2017 tax reforms were rocket fuel for manufacturers and made the U.S. economy more competitive on a global scale. Manufacturers kept our promises to create jobs, raise wages and benefits and invest in our community. By acting now, policymakers can choose economic growth over economic disaster and protect American livelihoods.

“This data—6 million American jobs at stake—makes crystal clear that preserving tax reform should be one of the first acts of the new Congress and the new administration. If Congress delays, manufacturers will be forced to delay investment and job creation decisions due to the uncertain outlook. In 2017, Congress passed the landmark Tax Cuts and Jobs Act late in the year, meaning that manufacturers’ investment decisions based on the law could not bear fruit until 2018 at the earliest. For example, manufacturing capital spending grew 4.5% and 5.7% in 2018 and 2019, respectively, compared to the meager 1.4% growth in 2017. In addition, manufacturers added 267,000 new jobs in 2018, the best year for job creation in manufacturing in 21 years.

“This time around, we can’t afford to wait: with crucial TCJA provisions having expired in recent years, the economy is already backsliding. Following the expiration of immediate R&D expensing in 2022, R&D growth in the EU surpassed the U.S. for the first time in nearly a decade—and China’s R&D growth tripled our own. Congress and President Trump should work expeditiously to stimulate activity this year by acting urgently to give manufacturers the tax certainty they need to plan for long-term, job-creating projects.”

“As the backbone of the American economy, manufacturers—both large and small—drive innovation, create opportunity and strengthen communities across the country,” said Johnson & Johnson Executive Vice President, Chief Technical Operations & Risk Officer and NAM Board Chair Kathy Wengel. “Maintaining competitive tax policy is essential to sustaining this momentum, enabling manufacturers to invest in cutting-edge technologies, expand operations and provide good-paying jobs. By preserving tax reform and its pro-growth policies that empower our industry, we can ensure a stronger, more resilient economy that benefits all Americans.”

“Failing to extend the Trump tax cuts could result in an estimated 6 million lost jobs and the devastation of America’s manufacturing sector,” said House Speaker Mike Johnson (R-LA). “It is the responsibility of Congress to act quickly so we can protect Americans’ livelihoods, prevent wage decreases and avoid the largest tax hike in history. We all know the importance of making things here in America, so House Republicans are working hard to preserve and build on President Trump’s historic tax reform and support America’s manufacturers.”

“This study confirms the need to immediately extend the Trump Tax cuts this year by showing the real-world devastation to America’s small businesses and manufacturers if we fail to act,” said House Ways and Means Committee Chairman Jason Smith (R-MO). “With nearly 6 million jobs on the line, Congress must act swiftly to give American small businesses, families and communities across the country the green light to hire more workers and expand their businesses to restore the greatest economy in our lifetime as soon as possible. The last thing they need is the largest tax increase in American history. Ways and Means Republicans have prepared for this moment for nearly two years and are ready to deliver an economic package that Makes American Manufacturing great again.”

“Trump’s tax reform allowed Americans to keep more of their hard-earned money, and enabled businesses to invest in their ideas, products and people,” said Senate Finance Committee Chairman Mike Crapo (R-ID). “Making these tax cuts permanent is the best way to ensure the greatest economic growth, provide certainty and stability for American businesses, and avoid the economic losses described in this study.”

“President Trump’s 2017 Tax Cuts and Jobs Act not only strengthened American manufacturing, but promoted job growth, drove innovation, increased hardworking Americans’ take home pay, and increased U.S. competitiveness. With President Trump returning to the White House and Republican majorities in the House and Senate, we must act quickly to ensure we maintain global competitiveness, support investment and innovation, and safeguard small businesses and workers,” said House Majority Leader Steve Scalise (R-LA). “Hardworking Americans deserve a strong economy that works for them, not against them. House Republicans stand ready to prevent the largest tax hike in history and make our economy great again.”

“Small manufacturers are disproportionately impacted by tax increases,” said Ketchie President and Owner Courtney Silver, outgoing chair of the NAM’s Small and Medium Manufacturers Group. “We’re already struggling thanks to the expiration of immediate R&D expensing, full expensing for capital equipment purchases and interest deductibility for job-creating projects. Congress should reverse these expirations and prevent even more devastating changes to the pass-through deduction, the estate tax and more from taking effect next year.” Silver recently testified before Congress to talk about the impact of tax reform to small manufacturers across the country.

Key Study Results:

Nationwide economic damage:

• 5.9 million lost jobs
• $540 billion reduction in employee compensation
• $1.1 trillion shortfall in U.S. GDP

Manufacturing impact:

• 1.137 million manufacturing jobs
• $126 billion in manufacturing worker compensation
• $284 billion manufacturing GDP reduction

To view the study, including state and district impacts, click here.

Background:

Manufacturers need Congress to prevent harmful tax increases, according to the NAM’s Q3 2024 Outlook Survey. Nearly 9 out of 10 respondents agree that Congress should act before the end of 2025 to prevent scheduled tax increases on manufacturers. The 20% pass-through deduction, individual tax rates and the estate tax exemption threshold are scheduled to expire or become less competitive at the end of 2025, as are important aspects of tax reform’s international tax system. These tax increases will build on damaging tax changes impacting R&D, capital investments and business loans that took effect in 2022 and 2023.

In 2018, the first year after tax reform’s enactment, manufacturing experienced the best year for job creation in 21 years and the best year for wage growth in 15 years; similarly, manufacturing capital spending grew 4.5% and 5.7% in 2018 and 2019, respectively. Manufacturers have used the savings from tax reform to grow their businesses, create jobs, raise wages, add new benefits for employees, fund R&D, purchase new equipment, expand their facilities and invest in their communities. When manufacturing grows, the economy grows. Correspondingly, when manufacturers experience devasting tax increases, the economy suffers.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.