Ending the “Made in America” Tax: Three Major Wins for the American People

December 21, 2016 — Press Releases   

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Our bold Blueprint for tax reform takes historic action to unleash job creation and economic growth in America. One of the most pro-growth features is that we’re finally going to end the self-imposed “Made in America” tax on U.S. exports – a backwards feature of our nation’s current tax code that gives foreign-made products an advantage over American-made goods, services, and intellectual property. 

Here’s a simple example of how today’s “Made in America” tax helps our foreign competitors at the expense of American businesses and workers: 

Consider two global companies: an American company that manufactures tractors in Ohio, and its European rival that manufactures tractors in Germany. With the “Made in America” tax imposed by the current U.S. tax code, the Ohio-based company is subject to U.S. tax on every tractor they make here and sell in Europe. Meanwhile, the European rival pays no U.S. tax on the tractors they make in Germany and sell in America. Imports are not taxed under the current U.S. system but American exports are. 

Basically, the “Made in America” tax on U.S. exports works exactly like it sounds – if you make products in America, you’re taxed when you sell them abroad. But if you make products abroad, you’re not taxed when selling them here. In this way, our nation’s current tax code provides a direct incentive for businesses to move operations and jobs overseas. After all, if it’s not “Made in America,” it’s not subject to the “Made in America” tax. 

Ending the self-imposed “Made in America” tax on U.S. exports is a bold solution that will help our businesses and workers compete and win anywhere in the world – but especially here at home. Here are three reasons why ending the “Made in America” tax is a win for our businesses, workers, and communities:

Win #1: Leveling the playing field for America’s job creators and workers

With some of the brightest, most innovative small businesses and workers in the world, the products we make and sell here in America often set the global benchmark for quality. That’s why our nation is so successful when competition takes place on a level playing field. But, today – with the “Made in America” tax – the deck is being stacked against our job creators and workers. The worst part of it all is that we’re doing this to ourselves.

By eliminating the “Made in America” tax, we can dramatically level the playing field for our workers and communities. No longer will American businesses be forced to compete with one hand tied behind their backs. Instead, competition will occur on price, quality, and service. And when that happens, “Made in America” products – and all of the businesses and workers who make them – are about as unbeatable as they come. 

Win #2: Making America a magnet for investment and job creation

It’s a basic rule of thumb – if you want to get less of something, put a tax on it. And that’s exactly what we’ve seen as a result of the “Made in America” tax. It’s completely backwards, and it continues to drive research and development, investment, and good-paying jobs out of our communities.

To get our economy moving again, America needs a modern tax system that empowers our job creators and workers to make more – not less – here in America. And we need a tax system that encourages our businesses to sell their products to more customers throughout the world. Success in global markets creates jobs and growth here at home. 

Ways and Means Republicans are committed to ending the “Made in America” tax as part of comprehensive, pro-growth tax reform. When combined with the other historic reforms of our Blueprint, this solution is a game-changer that not only removes incentives for companies to relocate abroad, but also makes the United States a magnet for 21st century investment and job creation. 

Win #3: A modern international tax system for the 21st century

America’s international tax system is among the most complex, costly, and uncompetitive of any major country in the world. Not only does this make it harder for our businesses to compete and succeed, it makes America a less attractive place to do business in the first place. Eliminating the U.S. tax on “Made in America” products will also eliminate antiquated and burdensome U.S. international tax rules that put our companies at a disadvantage in the global marketplace. In the end, that means a vastly simpler and more modern U.S. international tax system for the 21st century – one that supports economic growth here at home by giving our businesses, products, and workers a greater chance to succeed all over the world. 

Our major international competitors stopped taxing their own exports a long time ago. Now, it’s America’s turn to do the same. Ending the self-imposed “Made in America” tax on U.S. exports is a win for our economy and for Americans of all walks of life.

SUBCOMMITTEE: Tax Policy