The Obama administration wants to eliminate the LIFO accounting method which has helped manufacturers reduce their tax bill and which the White House has proposed scrapping in recent budgets. Republicans in Congress oppose the change.
“Top Republicans are slamming the administration’s proposal to roll back an accounting method often employed by manufacturers in its push to find new revenues for a deficit-reduction package,” a story written on The Hills website.
With LIFO accounting method, a manufacturer or trader is allowed to operate under the assumption that companies sell their newest inventory first, thus allowing them to value older stuffs at newest prices.
The administration has signaled in recent days that it wants to discuss eliminating the LIFO method. Such a move would lead to both a simpler tax code and a more level playing field in the manufacturing sector, and that it could be part of a balanced package to reduce the deficit according to White House.
But key GOP lawmakers like Sens. Jon Kyl of Arizona and Orrin Hatch of Utah disagree, saying Tuesday that the proposal was the latest misguided attempt by the administration to raise taxes on job creators. The Republicans said the proposal would raise taxes on that sector by tens of billions of dollars.
For his part, Hatch signaled that LIFO would be better examined in a push for tax reform, and asserted that he thought repealing the method was as misguided as the stimulus package.
“It’s time for this White House to get with the program, cut spending to cut the deficit, and stop putting forward proposals that threaten an economic recovery,” Hatch said in a statement as it’s cited by The Hills.(Source: The Hill)