Members of the Moulding and Millwork Producers Association (MMPA) learned this morning how President Trump’s tax proposals will go a long way in encouraging U.S. manufacturing. Scott Hummel of Turlington and Company gave some highlights of the proposed 2017 tax legislation in a session held this morning in Williamsburg, Va.

The tax plan will likely allow businesses to fully expense the costs of investment in tangible property.

“You want to write off your equipment or your new plant, and you can take that all now and give up your interest expense,” said Hummel, who pointed out that this will be for Year 1. “The goal is to fuel capital investment in this country. I think that [proposal] is going to survive in some form.”

Other predictions, according to Hummel, include keeping the research and development credit. He also expects mortgage interest charity exemptions to survive while others “may go away.” He also said the administration may retain the 20 percent maximum capital gain rate.

The big news, though, was a border adjustment tax that is buried in the legislation. It would have huge implications for importers and exporters. The proposal would provide for border adjustments exempting exports and taxing imports.

“This is the hottest mess you have ever seen,” said Hummel.

Why? “They won’t let you deduct imported product,” he said. But the plan would reward U.S. manufacturing.

“I have seen clients that have put on hold the building of overseas plants to build a plant here solely due to this plan,” said Hummel.

“This proposal is super-hot because basically you are creating a VAT tax,” he said. “The thing you will see is substantial currency fluctuations … The U.S. dollar would strengthen immensely.”

Hummel said he is hearing that, if passed, it would be made retroactive to Jan. 1, 2017.

“At the end of the day there will be a huge reward for U.S. production,” he said.

One attendee commented that this will make the U.S. more attractive to foreign companies.

At the end of the session one attendee joked, “Just think what we would be talking about if Hillary would have won.”

Another added,  “No matter what the repercussions, are it’s back to being about us again, which I like.”

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