March 14, 2017 at 3:48 pm ET
Semiconductor Industry Comes Out in Support of House GOP Tax Plan
The Semiconductor Industry Association, a trade group representing U.S chipmakers such as Intel Corp., Qualcomm Inc. and IBM Corp., came out in support of the House GOP’s “Better Way” tax plan on Tuesday.
SIA President and Chief Executive John Neuffer said in a statement that the Republican blueprint “would make America’s corporate tax system more competitive and allow U.S. semiconductor companies to grow, innovate, and create more jobs here in the United States.”
He added that while many details of the plan have yet to be addressed, his organization supports the proposal “as a framework for moving forward with tax reform.”
The House GOP’s plan, introduced in June, would lower the corporate tax rate from about 39 percent to 20 percent, move the U.S. to a territorial tax system and implement a border adjustment program, which would tax imports at 20 percent while exempting exports.
The border adjustment provision, which House Republicans say is necessary to pay for broader cuts in the corporate rate, has drawn opposition from retailers and prompted other industry leaders to come to its defense. It has also created intra-party divisions, with Sen. David Perdue (R-Ga.) last month calling it “regressive” and likely to increase consumer prices.
While SIA’s statement does not mention the border provision, Neuffer said in a Tuesday interview that one of the key questions to look into is how that provision is structured.
“Right now, the border adjustment is just a couple of lines in that blueprint,” Neuffer said. “It’s not a piece of legislation yet, and it’s unclear exactly how that piece of it fits into the puzzle and how it affects all of us.”
The U.S. semiconductor industry is the third-largest non-petroleum exporter in the United States, accounting for $43.1 billion in exports last year, according to SIA. Because those exports would no longer be taxed under the Republican plan, Neuffer suggested the adjustment could prove a tremendous boon for the semiconductor industry.
“There are certain amounts of materials and components that are imported” by the semiconductor industry, Neuffer said. “But net-net, the overall package will be positive.”
With its heavier emphasis on exports, the semiconductor industry is something of an outlier in the U.S. tech community. Industry associations such as the Internet Association, USTelecom, the Computer & Communications Industry Association, the Internet Innovation Alliance and the Software & Information Industry Association all declined to comment on the House GOP’s tax plan.