Reinvestment account proposal gains support in Congress
Legislation inspired by two Connecticut manufacturers is making headway in Washington.
Since members of Congress put out a call in March for legislation to help the nation”™s manufacturing sector, interest has been swirling around the idea of reinvestment accounts, which feature prominently in a bill introduced by U.S. Rep. Rosa DeLauro, a New Haven Democrat.
The Manufacturing Reinvestment Account Act would allow manufacturers to make pre-tax contributions of up to $500,000 for seven years into a dedicated account. At the end of the term, a 15 percent tax would be assessed, allowing manufacturers to use the saved funds for investments in machinery, facilities and job training.
“It originated here, just two guys sitting in Bridgeport and now we have a bill before Congress,” said Jamison Scott, vice president of Air Handling Systems in New Haven. “I think it would have a huge impact.”
Hugh McCann, president of Identification Products Corp. in Bridgeport, also helped draft the bill, which is supported by the New Haven Manufacturing Association.
If manufacturers saved the maximum amount allowed at 5 percent interest and paid a 15 percent tax rate at the end of seven years, business owners would have about $1 million more than they would in a taxable account, Scott said. The idea is similar to an individual retirement account, or an IRA. Scott, who also serves as the legislative committee chair for the New Haven Manufacturing Association, said he likes to call the saving account an MRA, short for manufacturing reinvestment account.
“There is a manufacturing renaissance going on,” Scott said. “We know it”™s not easy to get a bill passed in Congress but it”™s really been an exciting process. ”¦ This bill is just one of those things that will help as manufacturing continues to grow in this country.”
Scott said the lower tax rates would help companies become more efficient and greener, allowing them to grow and create more jobs. Additionally there is a community bank aspect to the bill, which would help generate local reinvestment, Scott said.
The bill proposes the so-called MRAs be held in community banks to keep the money off Wall Street and on Main Street, so banks can lend back into the community, he said.
Scott and McCann have been working on the bill since 2009 and now both the House Committee on Ways & Means and Joint Committee on Taxation have an interest in the bill. Scott said he has high hopes but realizes it might take more time and several more introductions to get the bill passed.
“I”™m just a manufacturer here in Connecticut but I”™m getting a much better sense of Washington politics,” Scott said. “I”™m very passionate about this thing.”