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Paul Ryan Visits New Balance; Says Tax Reform Coming This Year

Posted by Rick Lord on Jul 28, 2017 8:16:29 AM

For a man who carries the weight of the nation’s economy, budget and health-care systems on his back, US House Speaker Paul Ryan projects the approachable air of a neighbor who shows up at your door to lend you his hedge clippers.

Paul Ryan.jpgI joined other business leaders last Thursday afternoon meeting with Speaker Ryan during an event hosted by New Balance in Lawrence. Unfailingly gracious and remarkably relaxed, the speaker toured the only major foot-ware company that manufactures product in the United States to talk about the potential of tax reform to accelerate economic growth.

The rancorous Washington political debate followed the speaker to Massachusetts as labor unions and other protesters accused Ryan of being a “traitor” and of endangering people’s health with his political agenda. But inside the plant, humming with opportunity and economic activity, people of differing political stripes, Republicans and Democrats alike, left behind the public noise and engaged in a thoughtful discussion about how to encourage companies like New Balance to put people to work.

In other words, it was an event that more closely approximated the bipartisan, collaborative tenor of Massachusetts politics than anything that usually happens on the banks of the Potomac. Not everyone agreed on what tax reform should look like (AIM members are themselves far from unanimous about their approach to taxes) but everyone agreed that the system needs an overhaul.

The final contours of the Republican tax proposal are still being hammered out among the House, Senate and White House negotiators. But most observers expect the plan to reduce taxes on corporations and small businesses from 35 percent to somewhere between 20 and 25 percent, consolidate tax brackets, reduce deductions and simplify the tax-filing process.

Ryan said that Republicans remain far more united on tax reform than on repealing health-care reform.

“We’re going to get this done in 2017,” he told reporters.

“Obviously, we’ve seen in the Senate there are a difference of opinions on how to do health care reform. We are so much more unified on tax reform, on what it looks like, and how to do it, and the need to do it.”

New Balance, a longtime AIM member, employs more than 1,700 Massachusetts residents who use intelligence, lean manufacturing and efficiency to make running shoes in a state where manufacturing  is always a challenge. The company also developed the $500 million Boston Landing project in Brighton, a 1.45 million-square-foot campus that includes a new company headquarters, state-of-the-art athletic complex, hotel, restaurants, retail space and parking.

My comments to Speaker Ryan noted that New Balance and other manufacturing companies struggle to grow and provide jobs because the cost of doing business remains higher in the United States than in many countries abroad. Those costs are particularly onerous here in Massachusetts, where employers pay more for energy, health care and other necessities than anywhere else in the country.

I told the speaker that AIM is working with Governor Charlie Baker and the Legislature to address the health-care and energy cost issues, but that both are complex, structural problems that demand long-term solutions. Federal tax reform, on the other hand, offers a unique opportunity to improve the business climate in a relatively rapid time frame.

It will also be important to help small businesses during the tax-reform process. Both President Trump and the US House appear ready to lower taxes on subchapter S corporations and other pass-through entities, just as those companies face the prospect of seeing their state tax burden increased under an ill-conceived “millionaires tax” on next year’s ballot.

We all understand the potential challenges of tax reductions on a federal deficit that reached $523.1 billion during the first nine months of the current budget year. We all understand the need to debate spending priorities, especially in a state like Massachusetts where economically important industries such as health care, defense and higher education depend upon federal funding.

But the fact remains that employers like New Balance pay federal taxes that are almost a third higher than competitors in other countries.

“Today, places like this, this is more the exception than the rule,” Speaker Ryan told the media at New Balance.

“That’s our problem. Companies are not flocking to the United States, companies are fleeing this country and taking their good jobs with them. They’re not storing up their profits and their capital here, they’re keeping them offshore.”

Topics: U.S. House of Representatives, Taxes

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