Chemical manufacturing is one of the bedrocks of the American economy. How much so? If one looks at all of American manufacturing as a big pie, one would readily see that the business of chemistry is a major, if not dominant slice of that pie. Simply put, we make things that go into virtually all other things. A house is a chemical plant on a slab. A car is a chemical plant on wheels. An intra-ocular lens is the result of dozens of chemical processes that add value to materials until a slim piece of plastic gives sight to the blind.
Manufacturing, and to a great extent chemical manufacturing, are key drivers of American prosperity, but these industries are in peril! The Obama Administration has proposed nearly $350 billion in new taxes on manufacturing and energy industries. Am I kidding? Here are the major hikes.
- $17 billion - Reinstate Superfund taxes
- $24 billion – Treat tax carried-interest as income
- $5 billion - Codify "economic substance doctrine"
- $61 billion - Repeal LIFO
- $210 billion - International enforcement, reform deferral, other tax reform
- $4 billion - Information reporting for rental payments
- $5.3 billion - Excise tax on Gulf of Mexico oil and gas
- $3.4 billion - Repeal expensing of tangible drilling costs
- $62 million - Repeal deduction for tertiary injectants
- $49 million - Repeal passive loss exception for working interests in oil and natural gas properties
- $13 billion - Repeal manufacturing tax deduction for oil and natural gas companies
- $1 billion - Increase to 7 years geophysical amortization period for independent producers
- $882 million - Eliminate advanced earned income tax credit
But I’m not finished. Add to this another $600 billion in carbon dioxide taxes, much of which will be borne by manufacturing, energy companies and the utilities that provide us power.
Want more? What about the people who invest in manufacturing and energy stocks? Will they be incentivized to pump money into our industries? Probably not, based on how hard they are going to be hit by the Obama tax package! Their contribution will benearly $640 billion.
Increased taxes on those making more than $250,000.
- $338 billion – Expiration of Bush tax cuts
- $179 billion – Elimination of itemized deductions
- $118 billion - Capital gains tax hike
Add it up and you get nearly $1.6 trillion in new taxes. The American Chemistry Council estimates business taxes will cost the chemical industry alone $121 billion over the next ten years! Place yourself in the board rooms of major manufacturers throughout the world and ask yourself whether you would put your next investment dollar in the United States.
Is there method in this madness? If there is, we are in trouble.
If it is the intent of the policy wonks in the Obama Administration, most of whom have never set foot inside a chemical plant or visited an assembly line, to permanently knee-cap American manufacturing, they will succeed.
If they are as antagonistic and as vindictive toward the manufacturing industries that provide high paying jobs -- and energy companies that provide us feedstock and fuel -- as their proposals suggest, then they will kill thousands of these jobs. The jobs will never return. How do they recommend America replace the economic engine that their policies will destroy?
The flipside, of course, is that they are woefully naïve and simply don’t understand what they are doing. I hope that is the case, but I don’t think it is. The self-assurance they exhibit suggests that there is, regrettably, method in their madness.
The next two years are critical to the future of this country and to the industries that have made it great. If we don’t change the momentum that is washing us offshore, it will be Bye Bye Miss American Pie.