Ways and Means Witness Asks for Restoration of GSP and to Include India Again
The effect of benefits like Medicaid and child tax credits on worker supply were hotly debated at a field hearing convened by the House Ways and Means Committee in Peachtree City, Georgia, and there were many questions to business owner witnesses about the challenges of expiring tax provisions in the Trump tax cuts and about how inflation is affecting their profits and sales.
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But no member of Congress picked up on a point made by the owner of NAECO, Bruce Bergmann, as members sat in his factory for the April 21 hearing. In his opening statement, Bergmann said his company "would not exist if not for the GSP trade program. For 20 years, GSP eliminated tariffs on components from India. We used those savings to build export programs, to build this operation, ... and hold off Chinese competition." The Generalized System of Preferences benefits program has not been in place for more than two years, but India's ejection from the program was an executive decision in 2019.
He pays an additional $150,000 in tariffs annually on Indian inputs now, money that he used to reinvest. He said that would have paid for four or five manufacturing machines.
Because the EU still offers tax breaks for imported goods from developing countries, "I’ve lost exports to Europe. Our export sales are down from 33% of revenue down to under 20% of revenue," he said.
"GSP is a big help to our global competitiveness," he said. "If GSP is renewed, including India, it will help many U.S. companies grow and invest."
Committee Chairman Jason Smith, R-Mo., didn't mention the GSP testimony, and instead asked about a provision of the Trump tax cuts that allowed businesses to accelerate depreciation and write off the cost of certain purchases immediately, rather than taking the benefit over time. In order to cap the cost of the tax cuts, that provision begins to phase out this tax year and ends in 2027.
Democrats protested during the hearing that it was Republicans' choice to make certain provisions temporary, and that they have sponsored bills to restore some of the benefits for businesses.
Republican Rep. Drew Ferguson, whose Georgia district hosted the hearing, said that while businesses in the region have shown the ability to overcome the hurdles Washington has placed in their way, the administration's policies "are going to destroy the very jobs they claim to be promoting." He said requirements that tax credits go to cars or batteries made in North America hurts Kia Motors. He called the incentives "perverse."
Kia announced this month that it will bring EV manufacturing to its Georgia plant; a Kia subsidiary is also opening an EV battery plant in Georgia.