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Begich and Honeywell agree: “XTRATUF” corporate-tax problem requires immediate action

After shining the spotlight on the declining quality of XTRATUF boots after its manufacturer, Honeywell, moved production to China, Sen. Mark Begich may have found some common ground with the beleaguered boot-maker: both believe the U.S. corporate tax rate is too high.

Begich joined with Senate colleagues Ron Wyden (D-Ore.) and Dan Coats (R-Ind.) in the “Bipartisan Tax Fairness and Simplification Act of 2011” to cut the six existing corporate tax brackets to a flat corporate tax rate of 24 percent. The bill also includes provisions to allow most small businesses to expense all equipment and inventory costs and provides incentives for corporations that have moved overseas, like Honeywell, to reinvest in the United States.

“With many small businesses paying up to 35 percent in corporate taxes, my bipartisan proposal will free up capital that can be used to create jobs here in the U.S.,” Begich said. “There’s no question tax reform is needed as soon as possible, and I’ll work with anyone in the Senate, regardless of party, to get us there.”

On October 5, Begich sent a letter to Honeywell chiding the company for the decline in the boots’ quality after manufacturing was moved to China earlier this year. In the letter, Begich said he’d heard complaints from store owners and average Alaskans about how the made-in-China XTRATUFS were falling apart after a few short weeks of wear, earning them the derisive new nickname “SORT-OF-TUFS.”

In response, Honeywell Senior Vice President for Global Government Relations Richard Graber said the decision to move manufacturing to China was based on what it would have cost to update the company’s 90-year-old plant in Rock Island, Ill. to meet modern standards for productivity and safety. But Graber agreed that U.S. international tax rules are not competitive and are contributing to the outflow of American jobs.

“We hope Congress will undertake comprehensive tax reform that transitions the current system to lower rates and enhances the competitiveness of U.S.-based companies,” Graber said. “We would appreciate your leadership in this endeavor to help create a more vibrant American economy.”

Begich’s tax-reform proposal also simplifies the annual filing process for individuals, creating three tax brackets (15, 25 and 35 percent) rather than the current six while retaining popular deductions for mortgage interest, retirement, health care and education costs. The bill also creates a single-page tax form to reduce the hassle for individuals and business when April 15 rolls around.

Begich’s bill, formally known as Senate Bill 727, is with the Senate Finance Committee and may be addressed along with other tax reform proposals during the lame-duck session following the presidential election.

In the letter, Honeywell also listed the many steps they have taken to improve XTRATUF’s quality and performance, including extension production training and field testing. 

In response, Senator Begich is urging Honeywell to include field testing in Alaska where the boots really get worked hard.

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