Pro-Growth Tax Policies

Extending Pro-Growth Tax Policies to Support U.S. Manufacturing
The Tax Cuts and Jobs Act (TCJA) has been a key driver for the U.S. automotive industry to secure new investments toward U.S. manufacturing and create additional jobs for hardworking Americans to support their families. Critical provisions of the 2017 tax law have already sunset with more set to expire at the end of 2025, driving up costs and imposing a tremendous tax burden on original equipment manufacturers. Autos Drive America advocates for the continuation, modification, and modernization of vital policies to ensure the strong manufacturing capabilities of the U.S. and continued growth of U.S. jobs in the auto industry, including:

The immediate expensing of research and development costs to accelerate innovation, advance new technologies and ensure the U.S. auto industry remains competitive:

– International automakers operate 76 R&D facilities in 15 states, employing nearly 8,800 American workers.

– International automakers operate in an intensely competitive global industry and must make strategic choices about investments around the world. Prior to 2022, manufacturers in the U.S. were able to fully deduct their R&D expenses in the year incurred. With the five-year amortization of domestic R&D and 15-year amortization for foreign R&D in place for more than two years, international automakers and their U.S. employees need immediate action to correct this in order to accelerate innovation, advance new technologies and ensure the U.S. auto industry remains competitive.

Support bonus depreciation extension to boost investments in new machinery, plant upgrades, robotics and other critical equipment needed for increased production:

– Under TCJA, manufacturers were able to immediately expense 100% of the cost of capital equipment purchases. However, this provision began to phase out in 2023 to 80% and will continue to fall 20% annually until it expires in 2027. International automakers make significant investments in new machinery, plant upgrades, robotics and other critical equipment needed for increased production.

– In 2023, international automakers produced 4.9 million vehicles across nine states accounting for 48% of all U.S. vehicle production. International automakers are expanding their production in 2025 and beyond, opening six new manufacturing and assembly plants in the U.S. from 2025-2030.

Extend the foreign-derived intangible income (FDII) deduction to grow and preserve innovation in America:

– The TCJA shifted the U.S. towards a territorial tax system for international automakers, ensuring that foreign-source income and foreign subsidiaries of U.S. companies are not subject to U.S. taxes on their earnings. This made the U.S. a more competitive and affordable destination for manufacturing investment from international automakers. Ensuring that any modifications to international tax provisions continue to make the U.S. attractive for investment will be key to the success of auto manufacturing in America.

– The scheduled elimination of the 37.5% FDII deduction would diminish the competitive advantage of international automakers exporting from the U.S. and further attribute to United States’ global trade deficit.

Support additional policies that:

– Encourage investment in U.S. manufacturing

– Grow jobs for hardworking Americans

– Ensure the affordability of autos for millions of American families