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Corrosion Prevention Tax Credit

Corrosion Prevention Tax Credit. NACE Corrosion 2006 Front Page Issues March 13 th , 2006 San Diego, California.

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Corrosion Prevention Tax Credit

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  1. Corrosion Prevention Tax Credit NACE Corrosion 2006 Front Page Issues March 13th, 2006 San Diego, California

  2. Office of Corrosion Policy and Oversight Establishment of a National Committee on Corrosion with NRC/National AcademiesIndustry – Affect Policy to Warrant Investment in Corrosion Control Technologies

  3. CORROSION: An Unnecessary Threat to Economic Growth

  4. Special Program Note The governmental outreach initiative that we will describe today has only been tested to date with the US Congress. However, its concepts and processes can serve as a template for similar initiatives in countries throughout the world.

  5. 3.1% of $9 Trillion US GDP (1998) Greater than annual cost of all natural disasters in the USA (tornadoes, hurricanes, flooding) Greater than the Agriculture component of the US GDP ($127 billion) Greater than the Mining component of the US GDP ($106 billion) Annual Direct Cost of Corrosion in the USA $276 Billion

  6. Economic Indicators Business closures/job losses Jobs and companies outsource to foreign countries Decreased federal tax revenues

  7. Repair & rehabilitation alone creates waste Hampers our ability to compete globally Endangers public safety Contaminates environment Our Mantra Waste/costs are avoidable using already fully developed corrosion prevention technologies • Creates & retains jobs • Increases productivity • Increases federal tax revenues

  8. Corrosion Prevention Tax Credit 50% Tax Credit on Corrosion Prevention Strategies Investments Tax Credit to all businesses, in all industries based on new initiatives Invest in the Future “Request to Congress”

  9. Corrosion Prevention Tax CreditAssuming Businesses Reinvest their Corrosion Savings

  10. Asset Owner Model: Annual Cost of Corrosion $276,000,000,000 Potential Savings (1/3) 92,000,000,000 Cost to Implement Savings -9,200,000,000 Net Savings $ 82,800,000,000 (30%) Jobs created in corrosion technology field 128,800 Jobs created/retained due to reinvestment of tax savings 1,288,000 Annual Value of 1,416,800 new Jobs $56,672,000,000 Additional Tax Revenue (@18% Individual Rate) $ 10,200,960,000 Less 50% Federal Tax Credit for Corrosion Prevention -4,600,000,000 Net Tax Revenue Increase $ 5,600,960,000 US Treasury’s Return on Tax Credit 122% US Treasury Model: }1,416,800

  11. Corrosion Prevention Tax CreditROI to the US Treasury almost tripledif the savings are not reinvested

  12. Asset Owner Model: Annual Cost of Corrosion $276,000,000,000 Potential Savings (1/3) 92,000,000,000 Cost to Implement Savings -9,200,000,000 Net Savings $ 82,800,000,000 (30%) Jobs created in corrosion technology field 128,800 Jobs created/retained due to reinvestment of tax savings -0- Annual Value of 128,800 new Corrosion jobs $ 5,152,000,000 Corporate Income (70% of Savings) $ 57,960,000,000 Additional Federal Tax Revenue (34% Corporate Tax Rate) $ 20,633,760,000 Less 50% Federal Tax Credit for Corrosion Prevention -4,600,000,000 Net Tax Revenue Increase $ 16,033,760,000 US Treasury’s Return on Tax Credit 349% US Treasury Model:

  13. Tax Credit Results Provides incentives for business to consider corrosion preventive strategies versus “find it and fix it” mentality Allows U.S. businesses to become more competitive in world market by reducing wasted costs Provides a favorable Federal tax revenue impact to the US Treasury Net tax revenue of >$5.6 billion Return on Tax Credit of >120%

  14. Congress’ RoleCorrosion Prevention Investment Tax Credit Bill

  15. Corrosion Prevention Tax BillBill Concept

  16. Corrosion Prevention Tax BillBill Concept A 50% tax credit will be granted for implementation of corrosion prevention strategies listed herein that are applied to new or existing metallic structures or assets that are buried, submerged, concrete-encased or atmospherically exposed that are permanently located in the US. To qualify for the tax credit, the corrosion prevention strategy must be conducted by providers who are headquartered in the USA and all components of the corrosion prevention system must be of US origin.

  17. House Sponsors Cong. Michael Fitzpatrick (R-8th PA):Lead Sponsor Cong. Al Green (D-9h TX):Co-Sponsor Endorsed by 2 environmental groups Ways and Means (protectors of the Tax Code) Wm. Thomas (R-22nd CA): Current Chairman Jim McCrery (R-4th LA): Possible Incoming Chairman (2007) All Representatives (& Senators) will be important We need 218 votes in the House to pass Bill clearly has bipartisan appeal Shame on anyone who does not support it! Corrosion Prevention Tax Bill Bipartisan Focus

  18. HR 4913 The Section will be called SEC 45N. CORROSION PREVENTION AND MITIGATION MEASURES, revision to the 1986 IRS Code Corrosion Prevention Tax Bill ‘‘Corrosion Prevention Act of 2006’’

  19. Tax credit would be equal to 50 percent of qualified corrosion prevention and mitigation (cpm) expenditures Corrosion Prevention Tax BillBill Language

  20. 2. The term qualified cpm expenditures applies to amounts paid for design, materials, application and installation Corrosion Prevention Tax BillBill Language

  21. 3. A cpm system or component is qualified if certification is made by someone properly accredited in the technical area of concern Corrosion Prevention Tax BillBill Language

  22. Now What • Referred to Ways and Means Committee • Bill Thomas, Chr – CA (Bakersfield) • Chr – Joint Committee on Taxation • GAO, OMB, Hearing, Mark-up in Committee, Send to House • Need 218 Votes in House of Representatives • Send to Senate – Re-enter Committee Process • Need 51 Votes and Match with House Bill • President’s Desk

  23. The Bill requires a Gatekeeper to ensure quality of the Tax Credit implementation Determine a means for NACE to provide Tax Bill specific training and/or certification Corrosion Prevention Tax BillNext Steps

  24. NACE Congressional “Blitz” Promote benefits of Bill by local members with selected congressmen Letter (e-mail) writing campaign Advocate Kiosk Personal meetings (individuals) Meet-n-Greets (groups) NACE “Legislative Days” Corrosion Prevention Tax BillA Call for NACE Membership Action!

  25. Corrosion Prevention Tax BillChallenges • Distractions in Washington • War on terror/Iraq; Port Security; Lobbying Reform; 2006 elections • GY 2006 Budget Deficit • Corrosion lacks “sex appeal”

  26. Corrosion Prevention Tax BillTimeline. . . “A lesson in patience!” Cost of Corrosion Study Delivered to Congress Congressional Affairs Sub Committee Formed NACE Legislative Day Bill Introduced in House Initial NACE Tax Bill Strategy Drafted NACE Tax Bill concept tested on Congress and refined Bill Drafting Diligent Follow Up Summer thru Fall 2003 Summer 04 thru Spring 05 May 05 to March 06 Future 9/02 5/05 3/06 Spring 03

  27. + Members + = Good Government Good Citizenship Rising above the storm: We must work together

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