Tax Reform on the Move in Washington, D.C.

By Ken Schramko, government relations director

Comprehensive tax reform is on the move in the U.S. Congress.

On Thursday, November 2, Republican leaders in the U.S. House unveiled a comprehensive tax reform proposal and signaled plans to seek approval in the full House by Thanksgiving. Senate Republicans also are crafting a bill, which they aim to move to the floor by early December. Congressional Republicans and President Trump are vowing to complete tax reform by Christmas.

The package released by the House addresses four top IPC priorities. The bill would:
• Permanently reduce the corporate tax rate to 20 percent;
• Allow for immediate 100 percent expensing of new equipment through January 1, 2023;
• Preserve the R&D tax credit; and
• Reduce the top pass-through rate to 25 percent, but with new rules designed to prevent abuse by high-earning individuals who form themselves into corporations to get a tax cut.

Other provisions that could be of interest to IPC members include:
• Business interest expense would be allowed for businesses with average gross receipts of $25 million or less;
• The repatriation tax on earnings and profits comprising cash or cash equivalents would be 12 percent, higher than originally proposed, while remaining earnings and profits would be taxed at 5 percent;
• The estate tax exemption would be doubled at first, and then the tax would be repealed after six years; and
• The state and local tax (SALT) deduction would be eliminated except for property taxes (up to $10,000).

The bill text is here (https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf), and a section-by-section summary is here: https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_section_by_section_hr1.pdf?niReferrerLink=homepageHero.

House committee action is scheduled to begin on Monday, November 6. The “markup” session is likely to last the entire week as members of the House Ways and Means Committee are given a chance to offer amendments that could alter the bill’s language.

IPC remains optimistic in the effort to reform the U.S. tax code, with a goal of making the United States more congenial to the electronics manufacturing ecosystem. We will continue to work with our champions on Capitol Hill to advocate for IPC’s priorities in an effort to have them reflected in the final legislation.

If you have questions or comments about tax reform, or if you’d like to learn more about IPC’s government relations efforts and how your company can get involved, please contact me at KenSchramko@ipc.org.

 

Brexit: Potential Impact on the Electronics Industry

Brexit will have a big impact on the electronics industry. The so called “phase one” of the negotiations between the European Union (EU) and the United Kingdom (UK) is ongoing, with the two parts trying to reach an agreement on the terms of the exit of the UK from the bloc. In December, we are expecting the negotiators to move on to “phase-two,” which is the crucial discussion on the future EU/UK relationship, including trade arrangements.

With this in mind, IPC has sought the views of its European members on the key issues of concern for them. Electronics has benefitted substantially from the possibility to move components and articles across borders without restrictions and concerns over the imposition of customs checks or any measure that might delay the movement of goods across borders are key concerns for our members. In addition, there have been concerns over the possibility of products moving between the EU and the UK having tariffs imposed on them. Finally, to a lesser extent, some IPC members have voiced concern over possible restrictions in the access of highly skilled labor, which could make the recruitment of the necessary staff more difficult for the sector.

Brexit was discussed with key EU policy makers during this year’s IMPACT Europe event in Brussels, where our members’ concerns were communicated to officials. View discussion paper on the potential impact of Brexit on IPC members.

IPC members are invited to share their feedback on this document and any other thoughts and concerns they might have on Brexit with Ken Schramko, IPC’s director of government relations.

EU Circular Economy Initiatives — Possible Impact on Electronics Waste Management, Reuse and Recycling

The European Union (EU) is currently discussing new legislative and non-legislative initiatives aimed at establishing a Circular Economy. Their objective is to improve waste management, recycling, and reuse in Europe, in order to minimize the environmental impact of products, including electronics. These initiatives, once adopted, are likely to impact the electronics industry in different areas, including Extended Producer Responsibility (EPR), spare parts availability, chemicals’ authorization and information requirements.

Having a proportionate and smart environmental regulation is one of the key principles guiding IPC in its global advocacy policy. For this reason, IPC is following the current debate on Circular Economy, in order to identify the possible impact on the industry. If you would like to know more about the status of the discussions and their possible consequences on the electronics industry, view the IPC issue brief.

If you have any questions, please contact me at FernAbrams@ipc.org.

PCB Prototype Sales Trends Often Diverge from PCB Market Trends According to New IPC Report

A new report published this week by IPC, Trends in the North American Market for PCB Prototypes, reveals cycles in demand for PCB prototypes that often differ from demand trends in regular or volume-production PCB sales. Despite high volatility in prototype sales from month to month, the IPC data show clear cycles in prototype sales growth, year over year. Rigid PCB and flexible circuit prototype sales do not always reflect growth in the rigid PCB and flexible circuit markets overall.

Since 2014, rigid PCB prototype growth peaked in 2015, when overall rigid PCB sales growth was flat. In the first half of 2017, year-on-year sales growth for rigid PCBs and rigid PCB prototypes were both in negative territory, but the downturn for prototypes was more severe. In contrast, flexible circuit prototype sales took a nosedive in 2015 when overall flex sales were up. Flex prototype sales rebounded sharply in the first half of 2017 while regular-production flex sales were falling below last year’s levels.

Different drivers are the likely explanation for the different patterns of growth in sales of prototypes versus regular-production PCBs. New product development is a major driver of prototype work, while regular-production PCB sales tend to be more cyclical, reflecting economic conditions and end-user demand.

The study is based on data from IPC’s North American PCB Statistical Program covering 2014 through mid-2017. Data on prototype sales percentages by month compared to regular-production PCB sales, and estimates of North American prototype market sizes, are reported for all PCBs as well as for rigid PCBs and flexible circuits separately. The 29-page report, priced at $250 for IPC members and $500 for nonmembers, is available for immediate download in IPC’s online store.

The Value and Importance of Training and Certifying Employees

Training, certification and education are central pillars at IPC. John Mitchell, IPC president and CEO, discusses the value of training, certification and education and how IPC’s programs can help grow your business.

 

 

Treasury Report Calls for End of Conflict Minerals Regulations

The Treasury Department has called for scrapping corporate reporting requirements on conflict minerals and other topics. The department, in an October 6 report on growing the economy stated, “federal securities laws are ill-equipped to achieve such policy goals, and the effort to use securities disclosure to advance policy goals distracts from their purpose of providing effective disclosure to investors.”

Getting rid of the disclosure rules would require congressional action. Legislation that includes their repeal passed the House earlier this year, but is unlikely to be acted on by the Senate.

In the absence of action in Congress, the report suggested that the Securities and Exchange Commission tweak its rules to exempt smaller and certain newly public companies from reporting.

Although IPC members are deeply concerned by the human rights abuses that are occurring in the Democratic Republic of the Congo (DRC), the conflict minerals requirements of the Dodd-Frank financial regulation law have had questionable success in addressing the situation, while imposing significant costs on industry and consumers.

IPC continues to highlight the burden of conflict minerals compliance, most recently in meetings with members of the House and Senate during the IPC IMPACT advocacy event in Washington, D.C. in May.

IPC Secures Governors’ Proclamations for Manufacturing Day 2017

By Julie Desisto, IPC Government Relations Coordinator

Friday, October 6th marks the annual celebration of Manufacturing Day (MFG Day) across the United States. Manufacturers are joining in a collaborative effort to highlight current innovations and inspire the next generation of manufacturing professionals.

IPC, an official endorser of MFG Day, took the initiative of reaching out to several state governors to request proclamations on the importance of this annual celebration. We are pleased to applaud Governors Greg Abbot (R-TX)John Hickenlooper (D-CO), Bruce Rauner (R-IL), and Tom Wolf (R-PA) for recognizing the contributions of the advanced manufacturing industry in their communities and across the country.

Meanwhile, several IPC member companies have joined the growing list of more than 900 events occurring on or around MFG Day 2017. IPC member companies include:

STI Electronics will host local school groups, including a group of women engineers, to tour their manufacturing facility in Madison, Alabama.

Bay Area Circuits will give a presentation to invited guests on the importance of PCB manufacturing, and will conduct a tour of its facility in Fremont, California.

K-TECHnologies will provide tours for 85 Boards of Cooperative Educational Services (BOCES) students from 46 different high schools in the Wester New York region.

Power Design Services will conduct a tour of their 10,000-square-foot facility in San Jose, where attendees will be able to see the PCB assembly process. The event will include a career fair and a brief presentation on assembly technology and flow.

If you have any questions about participating in Manufacturing Day or have an event planned, please contact Julie Desisto, IPC Government Relations Coordinator, at JulieDesisto@ipc.org or 202-661-8093.

Wishing you all a successful MFG Day!

IPC to Host Free Webinar on New E-Textiles Standard Activity

by Chris Jorgensen, Director, Technology Transfer

Does your company manufacture or purchase e-textiles materials for use in your products? If so, you will want to attend a free IPC webinar on a new standard being developed by the IPC E-Textiles Materials Subcommittee.

IPC-4931, Requirements for Electronic Textiles (E-Textiles), Conductive Fibers and Conductive Yarns will be the first industry consensus standard for e-textiles materials. It will establish the classification system, qualification and quality conformance requirements and electrical/electronic performance requirements for electronically integrated textiles (e-textiles). It will also cover similar requirements and performance variables for conductive fibers and conductive yarns, which are essential components of e-textiles.

This webinar will provide background on the need for this standard, a report on the subcommittee’s work and additional activities the subcommittee has planned.

Topics to be covered:
• An overview of IPC-4931 and the formation of the E-Textiles Materials Subcommittee
• Key characteristics of e-textiles materials
• Industry test methods for e-textiles and identifying gaps in test methods
• Materials designations
• Publication plan for IPC-4931 and how IPC standards are developed
• How you can shape this standard or develop additional standards

Speakers:
Stephanie Rodgers, Apex Mills — IPC E-Textiles Materials Subcommittee co-chair
Diana Wyman, AATCC – IPC E-Textiles Materials Subcommittee co-chair
Chris Jorgensen, IPC E-Textiles Committee staff liaison

Date and Time:
Tuesday, October 31, 2017
12:00 PM to 1:00 PM Eastern

To register for Webinar, click here. Registrations will be accepted until October 30.

For more information on Webinar, please contact me, at ChrisJorgensen@ipc.org.

 

European Parliament Approves Amendments to RoHS Directive to Facilitate Secondary Market Operations

On 3 October, the European Parliament approved the review of the scope of the Directive on Restrictions of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS Directive). The Commission, the Parliament and the Council agreed in June on the text in inter-institutional negotiations.

The amendments extend beyond the current 2019 deadline the possibility to resell electronic equipment and spare parts containing prohibited substances, which were put on the market before the respective substances were prohibited.

IPC welcomes the scope review of the RoHS Directive, as it will facilitate repair, replacement of spare parts, refurbishment and reuse of electrical and electronic equipment, such as refurbished medical equipment for instance. The review will remove unnecessary barriers to secondary market operations and foster the transition towards a circular economy.

IPC members will have the opportunity to discuss this and other issues with EU policy makers during the annual IMPACT Europe event on 9-10 October in Brussels. For more information on this event, contact John Hasselmann, vice president of government relations at JohnHasselmann@ipc.org.

 

IPC Welcomes Trump Administration’s Framework on U.S. Tax Code

On September 27, 2017, the framework for tax reform was released, which reflects the agreement reached by the White House and Republican leaders of the House Ways and Means Committee and the Senate Finance Committee. According to the authors of the framework, it is intended to serve as a “template” for the committees of jurisdiction as they develop a legislative proposal.

Some of the highlighted points in the framework related to businesses are included below.

• Top rate of 25% for S corps
• Top rate of 20% for C corps
• Eliminate the corporate Alternative Minimum Tax (AMT)
• Write off the cost of new capital investments for 5 years
• Limit on the deductibility of interest
• Eliminate most tax deductions, but will keep the R&D tax credit
• Transition to a territorial system

IPC has and continues to support:

• a lower corporate tax rate;
• a strengthened R&D tax credit (including an increase to the alternative simplified credit making it 20%); and
• making bonus depreciation permanent.

The full tax reform framework can be viewed here: https://waysandmeansforms.house.gov/uploadedfiles/tax_framework.pdf

The one-page overview of the tax reform framework can be viewed here:
https://waysandmeansforms.house.gov/UploadedFiles/Tax_Framework_1pager.pdf

The IPC statement on the tax reform framework can be viewed here:
IPC Welcomes Trump Administration’s Framework on U.S. Tax Code