There are many elements of our tax code that Congress is poised to correct by passing comprehensive tax reform. Maybe the biggest improvement would be fixing a tax system that favors larger corporations who move U.S. jobs overseas, but penalizes manufacturers which primarily base their operations in the United States.
Manufacturing is one of the core industries that makes the United States an economic powerhouse. It provides meaningful, good-paying jobs and offers employees the satisfaction of a career in which they can be proud of the products they make.
I see that every day at the family-owned firm I have overseen for more than three decades. Sullivan-Palatek manufactures industrial air compressors right here in Indiana, where we have grown to support 190 jobs. We’re a proud contributor to the entire equipment manufacturing industry nationwide, which supports more than 62,000 jobs here in Indiana, and almost 1.3 million jobs across the United States.
Many of the jobs we support at Sullivan-Palatek require a skilled workforce, which we develop through years of hard work, training and hands-on experience. Some of our more complex compressor models contain more than 1,000 parts and may take more than a week to complete through the full assembly process.
Our employees show tremendous pride in this work; it is one of the most amazing and gratifying parts of our work. A complete range of support staff also helps us engineer new products and assist customers in the purchase and use of our equipment.
We want to re-invest in our employees and in our manufacturing business. In fact, there are numerous equipment and tooling projects that already would have been started if it weren’t for the excessively high federal taxes place on our business.
The Tax Cuts and Jobs Act under consideration by Congress isn’t perfect. But it addresses many of the inequities that has contributed to the loss of U.S. manufacturing jobs over the past few decades.
Tax reform will put U.S.-based manufacturers on a more even position versus firms who base most of their operations overseas. Tax reform will make it easier for companies to bring money that has unnecessarily remained overseas back to the United States, so they can invest in their businesses and workforce. Most crucially, corporate tax reform will strengthen the broader manufacturing economy and the equipment manufacturing industry specifically — an industry that supports plenty of middle-class and upper-middle-class jobs.
That is why tax reform is so essential for our industry. While readers might be familiar with a few larger, publicly-traded equipment manufacturers, many more equipment manufacturing firms are privately or family-owned. These companies play an important role in our manufacturing economy, but face added challenges in obtaining operating capital from outsources. Their growth and modernization hinges on their profitability, and their profitability is harmed by our burdensome and cumbersome tax code.
For many of these companies, substantial product innovation and improvement are their lifeblood. Companies that don’t evolve and adapt don’t survive. Innovation requires capital investments to support new products and production techniques. And right now, our tax code distorts those capital investments, which, in turn, harms job creation.
So it’s time for our tax-writers in Washington to take a cue from many small manufacturing businesses. It’s time that we evolve our tax code to reflect our 21st Century economy. Congress should seize the opportunity to pass tax reform that encourages the next manufacturing renaissance in America, and the scores of jobs that will come with it.
Bruce McFee is chairman and CEO of Sullivan-Palatek in Michigan City.