Ayotte calls for tax reform in Milford
U.S. Sen. Kelly Ayotte said Tuesday that the country needs to significantly reform its business tax code in order to remain competitive in a global marketplace.
Touring Hitchiner Manufacturing Co., the Nashua Republican said business tax reform is an issue on which both parties can find common ground, advocating for simplifying the system and making it more fair in terms of deductions.
The tax talk comes about eight months before the 2016 presidential election, and Democrats and Republicans alike have pitched campaign policies to spur companies to increase jobs and invest here instead of other countries.
"If we continue to have a code that encourages the investments to stay somewhere else, that doesn’t help us grow good-paying jobs," Ayotte said while speaking with management at the Milford facility.
"I’ve heard people on both sides of the aisle talk about this issue. It’s an important issue – we just don’t agree how to get there, but it’s got to be done," she said. "As you know, there are companies that have trillions of dollars overseas because of the tax rates, and obviously I think it would be beneficial to address the tax code and make our rates more competitive so that investment could be here."
John H. Morison III, Hitchiner chairman and CEO, said amending the tax code could help Hitchiner "put more people to work" while remaining competitive in the high-quality investment castings industry.
The company was established in 1946 by A. Frederick Hitchiner and purchased by the Morison family three years later. They moved the business to Milford in 1951 and steadily made improvements to casting technology, including the patented countergravity technology.
While there are an estimated 600 employees in Milford, the company’s sites in Mexico have a workforce of roughly 1,000. Locally, it has partnered with New Hampshire colleges to establish a direct pipeline to keep talented workers in the state.
Randal Donovan, the company’s CFO and executive vice president of finance, said Hitchiner faces the typical wage and productivity challenges of an international venture, noting that the average hourly rate in New Hampshire of $18.38 far surpasses that of the workers in Mexico, at $1.99.
When it comes to income tax rates, the United States is much higher than other countries, Donovan said, and that higher figure limits growth here and cuts into profit available for further investment.
Hitchiner representatives said the Mexico tax rate is 30 percent, while the U.S. is about 40.5 percent when including the marginal federal rate and the state business tax. The company also argues that the current U.S. tax code hinders corporations from reinvesting foreign earnings, citing a 10.5 percent tax imposed on Mexican profits returned to the country.
"We’re really discouraging companies from bringing it back," Donovan said. "We have – and companies like us have – hundreds of millions of dollars overseas that we’d like to bring back. In this election, there’s a lot of talk about building a wall – our tax code has really created a barrier to bring those profits back."
Ayotte, who is up for re-election this fall and facing a strong challenge from Gov. Maggie Hassan, said more resources and investments made in New Hampshire will yield a larger, more skilled workforce with better-paying jobs.
"This is one where I hope whatever happens in this election, whoever gets elected, this is on the top of their list. And I think it would be one of the most important things we could do for the economy," she said.
Chris Garofolo can be reached at 594-6465, firstname.lastname@example.org or @Telegraph_Chris.