Senator Stabenow Introduces Bipartisan Legislation to Support U.S. Manufacturers, Create More American Jobs

WASHINGTON, D.C. – U.S. Senator Debbie Stabenow (D-MI) joined Senator Rob Portman (R-OH) and Senator Sherrod Brown (D-OH) in introducing legislation amending our tax laws to support American manufacturers and to create jobs here at home.  The bill makes it clear that both companies using contract manufacturers and the contract manufacturers themselves are eligible to claim tax deductions that reward domestic manufacturing activities in the United States.

“We don’t have an economy or a middle class unless we make things and grow things,” said Senator Stabenow.  “This bill makes a commonsense change to our tax policies that will encourage manufacturers to create more jobs here at home.”

“This legislation will help ensure our tax code encourages good-paying manufacturing jobs right here in the United States,” said Senator Portman.  “The IRS’s interpretation of the section 199 regulations has resulted in disputes and litigation between the IRS and contract manufacturers, and, as a result, the law’s incentive to promote domestic manufacturing has been diminished.  This legislation will end those disputes so that businesses can focus on creating jobs.”

“When U.S. manufacturers provide American jobs with good benefits, they should be rewarded,” said Senator Brown. “This simple fix will promote job creation by making sure American manufacturers can get the tax deduction they need to grow.”

Section 199 is one of the largest tax incentives that benefits domestic manufacturing. It provides companies with a 9% deduction on their income from domestic manufacturing activities, giving those activities a lower effective tax rate and making U.S. manufacturing a more attractive investment. 

Under current tax law, it is unclear whether a company using a contract manufacturer or the contract manufacturer itself is eligible to claim the deduction.  Senator Stabenow’s legislation would clarify tax law to allow both entities to claim the Section 199 tax incentive for domestic manufacturing.