Tax Reform and the Impact on the U.S. Boating Industry
| November 9, 2017
Tax Reform and the Impact on the U.S. Boating Industry

Thom Dammrich, NMMA



This week, Congress is set to unveil details on a comprehensive tax reform bill in an effort to update and modernize the current U.S. tax code. NMMA has long called for comprehensive tax reform in order to unleash the economic power of manufacturing, and ultimately position the U.S. as the best place in the world to build boats. With the proposed legislation likely to conquer the rest of the legislative calendar year, here are three notable items NMMA is monitoring that could impact our members.

- Corporate tax rate lowered to 20 percent.

o The lowered tax rate would position manufacturers to be globally competitive, and ultimately spur capital and investment to create more jobs domestically and sustain economic growth. A recent survey from the National Association of Manufacturers found that every $1.00 spent in manufacturing adds an additional $1.81 to the economy.

- New rate for 'pass-through' businesses at 25 percent.

o 95 percent of American businesses are sole proprietorships, partnerships and S-corporations—businesses that qualify as a 'pass-through' business (aka 'small business'). Similarly, approximately 95 percent of NMMA members are small businesses. The proposed legislation would cap these rates at 25 percent. Historically, pass-through profits were taxed as high as 39.6 percent, which is higher than the current top corporate income tax rate of 35 percent. What's more, small business owners are typically taxed at their individual tax rate. Capping the tax for pass-through businesses at 25 percent would give these businesses a lower tax rate than many currently pay.

- Increased consumer spending dollars to purchase first-time or upgrade their existing boat.

o Tax reform, if done right, should put more money in the pockets of Americans. The proposed legislation calls for the creation of three new tax brackets, with rates coming in at 12 percent, 25 percent and 35 percent. While the income levels for each new bracket are still not yet defined, the policy would look to boost consumer spending broadly.

 

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