Legislation introduced to stimulate economy, create jobs

U.S. Reps. Don Manzullo (R-IL) and Dan Lipinski (D-IL) today introduced legislation to stimulate the economy by accelerating an existing tax incentive to help manufacturers create and keep jobs in America.

The American Jobs Creation and Economic Stimulus Act of 2008 (HR 5101) would speed up a domestic manufacturing tax deduction to give large and small manufacturers a larger tax break on the goods they produce in the U. S. The bill is also co-sponsored by Chief Deputy Minority Whip Eric Cantor (R-VA), House Ways & Means Trade Subcommittee Ranking Member Wally Herger (R-CA), and Rep. Jeff Fortenberry (R-NE).

The tax deduction currently provides a 6 percent tax rate reduction for manufacturers on the goods and services they produce in the U. S. The tax rate reduction is scheduled to increase to 9 percent by 2010, but the bill introduced today would accelerate the phase-in to 9 percent retroactively to Jan. 1, 2008.

"This legislation gives our manufacturers an extra 3 percent cut in their tax rate immediately that they can use to expand and create jobs in America. It also provides a greater incentive for our manufacturers to keep jobs in the United States because they would pay a 9 percent tax penalty on any work they send offshore," Rep. Manzullo said. "This legislation would provide a tremendous stimulus to our economy while helping our manufacturers create good-paying jobs and keep them at home in America. It should be included in any economic stimulus bill Congress considers in the next few weeks."

According to the Internal Revenue Service, 402,710 small manufacturers that paid taxes at the individual rate (S-Corporations, LLCs, partnerships and sole proprietorships) in 2006 and 41,668 larger manufacturers that paid corporate income taxes in 2005 (2006 corporate figures not yet available) benefited from the manufacturing tax deduction.