The most recent Labor Department employment report showed 23,000 manufacturing jobs added in December, marking two consecutive years of job growth in this critical sector. While this is welcome news, it comes following a steep decline in manufacturing employment during the recession and is the first time the sector has experienced such an expansion in over a decade.
It is therefore critical that Congress and the Administration work together in a bipartisan fashion to further enhance support for U.S. manufacturing.
Over the last decade, the United States lost more than 56,000 manufacturing facilities and approximately 5 million manufacturing jobs. During much of that period, the U.S. economy was sustained by a housing bubble and growth in the financial sector, as well as other service-oriented professions.
While it is important to support the service-side of the American economy, without a strong manufacturing base we cannot expect to create the number of well-paying jobs we need to sustain a vibrant middle class and spurn long-term economic growth. We need to move from a country that consumes to one that builds again.
Some may dismiss such a statement as nothing more than what one would expect from Representatives of New England and the Midwest with fond memories of the booming manufacturing towns of previous decades. Yet, such a view fails to appreciate how critical manufacturing is to job creation and American competitiveness in a globalized 21st century economy.
As importantly, we are not just talking about yesterday's manufacturing, but the advanced innovative manufacturing of tomorrow. These are industries our global competitors in Asia, Europe and elsewhere are investing in, such as high-tech electronics, alternative energy and advanced medical equipment.
That is why, with many of these jobs being shipped overseas, we believe we must incentivize manufacturers to build their facilities here in the United States and invest in American workers. One way to do that is to reduce the effective tax rate on manufacturers.
Together, we have introduced the bipartisan Manufacturing Reinvestment Account Act, which would allow manufacturing firms to establish a manufacturing reinvestment account (MRA), similar to an IRA, in a community bank and to make annual pre-tax contributions of up to $500,000 that may be held in the MRA for up to 7 years. Amounts distributed from the MRA are effectively taxed at a low 15% rate and must be used to purchase equipment and facilities or for job training.
The option for manufacturers across the country to invest in MRAs would help them get a bigger return on the dollar and free up capital, ensuring they can succeed in both the short and long-term. The use of such accounts would have positive ripple effects throughout the U.S. economy.
With both Democrats and Republicans citing the need to pursue tax reform, we believe any changes must strengthen the American manufacturing base. That means maintaining incentives in the tax code such as accelerated depreciation for certain capital assets and research and development expensing and tax credits.
It also means pursuing new policy solutions, such as MRAs, to lay the foundation for manufacturers to thrive, create jobs, and produce and export the cutting edge technology that will allow the U.S. economy to remain globally competitive.
As part of the 86 Democratic and Republican Members of the House Manufacturing Caucus we are not alone in this belief. We also believe we have a partner in the Administration's newly established Office of Manufacturing Policy.
The American public expects us to work together to identify policy solutions that create jobs and strengthen the economy. A focus on revitalizing the manufacturing sector must be a centerpiece of that effort.
Representatives Rosa L. DeLauro (D-CT)http://delauro.house.gov/ and Donald A. Manzullo (R-IL)are members of the House Manufacturing Caucus.