Executive Briefings

How Much Do Manufacturers Care About Tax Breaks?

President Barack Obama singled out manufacturers for special treatment in his recently unveiled proposal for an overhaul of the tax code. While the overall corporate tax rate would decline under Obama's plan, from 35 percent to 28 percent, manufacturers would pay even less - around 25 percent of their income. The idea is to encourage manufacturers either to stay put or bring factory work home from foreign locales such as China.

The problem is, tax benefits for manufacturers may not have the intended effect. Howard Wial, an economist and fellow at the Brookings Institution, which released an ambitious report Feb. 22 about manufacturing in the U.S., says tax breaks generally don't figure that much in companies' decisions on where to produce things.

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President Barack Obama singled out manufacturers for special treatment in his recently unveiled proposal for an overhaul of the tax code. While the overall corporate tax rate would decline under Obama's plan, from 35 percent to 28 percent, manufacturers would pay even less - around 25 percent of their income. The idea is to encourage manufacturers either to stay put or bring factory work home from foreign locales such as China.

The problem is, tax benefits for manufacturers may not have the intended effect. Howard Wial, an economist and fellow at the Brookings Institution, which released an ambitious report Feb. 22 about manufacturing in the U.S., says tax breaks generally don't figure that much in companies' decisions on where to produce things.

Read Full Article