How Tax Reform Helped a Manufacturer Expand

INX International, a global manufacturer of high-performance printing inks and varnishes, has a strong and strong presence in the USA thanks to the tax reform.

The company’s success was made possible in part by the lower corporate tax rate from the tax reform and an overseas intangible income (FDII) allowance that encouraged companies to develop and maintain intellectual property in the U.S. by providing a lower tax rate on overseas sales is on US IP. These reforms have helped manufacturers like INX invest in their facilities and people in the US – and INX has done just that.

Manufacturer wanted: From 2017 to the present day, the company has hired 89 employees – an increase in staff of 7%. And despite the significant increase in the number of employees, INX was able to use its tax savings to pay all employees good wages and social benefits.

• “We haven’t had a year since 2017 without a raise in salary or benefit,” said David Rossi, INX vice president of tax and finance. “That’s because the company is doing pretty well – it’s benefiting from the economy and tax reform.”

Equipment expanded: INX has also worked to build new manufacturing capacity, partly funded by the 2017 tax law changes.

• “The FDII withdrawal made us $ 1.1 million in 2020 alone,” said Rossi. “That’s two thirds of a solid device setup for a new location. This number is important to us. “

IP stays local: Regulations like the FDII deduction have allowed INX to keep its intellectual property in the United States rather than relocating critical productions to facilities in other countries where labor and production costs may be lower.

• “We have stationary production in the USA and keep our intellectual property here; We keep our research and development here, ”said Rossi. “Our ideas are there. Everything is developed here in the USA and stored in the USA. “

Other advantages: The highly competitive labor market means INX is also using its tax reform savings to attract and retain workers – making stability and security with these tax rules even more important.

• “We have increased entry-level wages dramatically due to competition for production workers,” said John Hrdlick, INX CEO. “The employees hired last year are also growing. We incentivize referral for new positions and spend a reasonable amount to recruit and retain employees and stay one step ahead of our competition. If we weren’t in a strong position now, we couldn’t. “

Along the road: The INX team is concerned about what could happen if the tax reform were rolled back and their tax burden increased. Particularly in the case of a persistent shortage of manpower and materials – and in the event of delays in shipping and freight transport – higher taxes would make it more difficult to continue the investments made.

• “Right now, all savings are being invested in our people and operations,” said Bryce Kristo, INX’s chief financial officer. “Any loss will have a negative effect on it.”
• “When something changes, they talk about smaller plants, less expansion or no expansion at all,” said Rossi.

The last word: “We are in a very competitive and important industry,” said Hrdlick. “We’re almost a $ 500 million company, but we have single-digit operating income given the high level of competitiveness. All of these proposed tax hikes will take some of that away. Everything we get we invest in our people – and if that number is dramatically reduced, it becomes a problem for us. “

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