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Tax reform plan divides industry

by Glenn Hess, special to C&EN
February 27, 2017 | A version of this story appeared in Volume 95, Issue 9

Several large chemical and pharmaceutical manufacturers are calling on Congress to reform the corporate tax code and include a controversial proposal by Republicans in the House of Representatives that would tax imports but not exports. The changes would encourage businesses to invest in the U.S. and help protect jobs from “unfair foreign competition,” the companies wrote in a letter last week to congressional leaders. Sixteen executives signed the letter, including the CEOs of Dow Chemical, Celanese, Celgene, Eli Lilly & Co., Merck & Co., and Pfizer. But the Society of Chemical Manufacturers & Affiliates, which represents smaller specialty chemical makers, says the plan could hurt companies that import raw materials that are not available domestically. “Our members cannot afford to carry the burden of an import tax,” says Robert F. Helminiak, SOCMA’s managing director of government relations. The GOP blueprint would cut the corporate tax rate from 35% to 20% and allow exporters to deduct the cost of production from their taxable earnings. But companies would not be able to deduct the cost of imports, a feature known as border adjustment that effectively imposes a tax on those imported goods.


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