By Alwyn Scott
SEATTLE Boeing Co (BA.N) and about 90 other aerospace companies are urging Congress to overhaul the U.S. tax system, saying a set of changes Republicans proposed last year - including a big cut in the corporate tax rate - will make them more competitive globally and help create U.S. jobs.Boeing Chief Executive Dennis Muilenburg was among those who signed a letter to Republican and Democratic leaders in the U.S. House and Senate that was dated Friday and due to be released publicly on Tuesday, according to the Aerospace Industries Association (AIA).The support comes as congressional Republicans are developing measures to alter the U.S. tax system, a task they plan to tackle after addressing healthcare, according to several people familiar with the matter. "We urge you to enact legislation that modernizes our tax system, allows America's businesses to better compete in the global marketplace and encourages job creation and innovation in the United States," said the AIA letter, also signed by the group's CEO, David Melcher.The changes are based on a blueprint released in June by House Ways and Means Committee Chairman Kevin Brady, a Texas Republican.
Among its key elements, Brady's proposal would cut the U.S. corporate tax rate to 20 percent from 35 percent, permit immediate deductions for capital investment and introduce a border adjustment tax system that would tax imports into the United States but not tax revenue generated by exports out of the country.The push on taxes by aerospace companies comes as they face some uncertainty under the administration of President Donald Trump. The new president lost no time in publicly pressing Boeing and Lockheed Martin Corp (LMT.N) to lower costs on planes bought by the U.S. government. As they source parts and sell many of their products overseas, aerospace companies also stand to suffer if Trump's aggressive trade policies cause friction with other countries.
Trump has voiced support for the tax reform plan, and spoke favourably about a border tax. Commerce Secretary Wilbur Ross later said Trump had not endorsed the House Republicans' specific border adjustment tax plan.Drafters of the plan say a tax on imports would increase the value of the dollar, helping offset the cost of imports to U.S. manufacturers by giving them more purchasing power. A stronger dollar would, however, make U.S. goods more expensive for foreign buyers.
Boeing's Muilenburg is AIA chairman this year and was joined in signing the letter by Raytheon Co (RTN.N) CEO and AIA vice chairman Thomas Kennedy.Other companies involved in aerospace manufacturing also signed, including Lockheed Martin, General Electric Co (GE.N), Northrop Grumman Corp (NOC.N), Honeywell International Inc (HON.N), Rockwell Collins Inc (COL.N), Rolls-Royce Holdings Plc (RR.L), General Dynamics Corp (GD.N), Harris Corp (HRS.N), International Business Machines Corp (IBM.N) and L3 Technologies Inc (LLL.N). The signatures were gathered at a supplier meeting in Seattle last week, Boeing said. AIA said it has more than 330 members.Boeing shares were trading at $178.89 in the afternoon on the New York Stock Exchange. (Reporting by Alwyn Scott; Editing by Bill Rigby and Phil Berlowitz)
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Updated Date: Mar 15, 2017 03:45 AM