Rep. Roy launches BEAT CHINA Act to reduce manufacturing reliance on China
WASHINGTON— On Wednesday, as the supply chain crisis plaguing America’s economy continues to worsen, Rep. Chip Roy (TX-21) led 11 of his House colleagues in introducing the BEAT CHINA Act to bolster domestic manufacturing and reduce America’s overdependence on global supply chains.
“As long as we depend on China and the rest of the world to keep our shelves stocked, our economic prosperity, our political liberty, and our national security are all in grave danger. Relying too heavily on supply chains based in other countries is a recipe for disaster — especially when the governments of those countries wish to destroy our way of life, as does the Chinese Communist Party,” Rep. Roy said. “We must take bold action, consistent with the spirit of free enterprise, to reduce our dependence on foreign supply chains. The American people deserve an economy that can provide for itself; that’s why I am proud to reintroduce the BEAT CHINA Act, which would extend tax advantages to any foreign manufacturer that moves its production to the U.S.”
This bill encourages reshoring by providing the tax advantages to manufacturers that move to the U.S. from abroad:
- Non-residential real property purchases by qualifying manufacturers would be considered 20-year property instead of 39-year property, making the property eligible for full and immediate expensing, or “bonus depreciation.”
- This bill would also make full and immediate expensing permanent. Under the Tax Cuts and Jobs Act, this provision in the tax code is currently set to phase out after 2022.
- Qualified manufacturers could also exclude from gross income any gain earned on the disposition of assets in its country of origin. This will prevent manufacturers from taking burdensome tax hits when they move to the U.S.
- To qualify for these incentives, a manufacturer must maintain at least the same production levels in the U.S. as it did in its country of origin.
In 2018, China accounted for over 28% of the world’s manufacturing output, while the U.S. accounted for only 16%. The COVID-19 pandemic shined a light on the U.S.’s overdependence on China for critical manufactured goods and the threat it poses to national security. The crisis now literally surrounding our nation’s ports has only further highlighted the United States’ precarious dependence on foreign manufacturers.
“At a seasonally adjusted annual rate, the US is buying $635 billion of Chinese goods, equal to a staggering 27% of US manufacturing Gross Domestic Product,” Economist David Goldman wrote last week at the Asia Times. “That’s the sort of import dependency economists associate with Third World countries dependent on former colonial powers.”
Cosponsors to the bill include Reps. Randy Weber (TX-14), Madison Cawthorn (NC-11), Paul Gosar (AZ-04), Jeff Van Drew (NJ-02), Lauren Boebert (CO-03), Louie Gohmert (TX-01), Greg Steube (FL-17), Mary Miller (IL-15), Dan Bishop (NC-09), Bob Good (VA-05), and Michelle Fischbach (MN-07).
This legislation is supported by National Taxpayers Union, FreedomWorks.
Full text of the legislation is available at the link here.