WASHINGTON, D.C. – Today, U.S. Senator Sherrod Brown (D-OH) led a group of colleagues in a follow-up letter to U.S. Department of Treasury Secretary Janet Yellen, urging her to provide tax relief to auto dealers experiencing inventory shortages due to global supply chain issues. Pandemic-related supply chain disruptions have impacted businesses and consumers, with slow-downs and factory closures, particularly with semiconductors, leaving businesses with drastically lower inventories. These disruptions could leave auto dealers in Ohio and across the country with unexpected tax liability if not addressed. The senators’ letter is a follow-up to a letter they sent to Sec. Yellen in November.
“The automotive industry continues to face dramatic and unprecedented inventory shortages due to the pandemic and foreign supply chain disruptions, and it will take many months for affected local businesses, employees, and their customers throughout our states and across the country to recover,” wrote the senators. “Granting Sec. 473 relief will help protect the auto industry and all its workers. Thank you again for your efforts to ensure a speedy economic and automotive recovery.”
Supply chain disruptions have had far-reaching impacts in Ohio, from bottlenecks in the trucking industry to long delays in new home construction. While demand has remained strong over the last year, production has been hindered by insufficient materials across many industries. The shortage of microchips is a barrier to increased vehicle production, and paint producers have cited a drop in sales due to a lack of raw materials. Recent surveys by the Federal Reserve Bank of Cleveland have shown that uncertainty about the future has made companies hesitant to invest in additional capacity.
“On behalf of Ohio’s 800+ franchised auto dealers, 55,000+ employees and the communities that rely on dealer investment, we appreciate Senator Brown’s leadership to provide stability to small businesses managing hugely depleted inventories due to the impacts of unprecedented foreign supply chain disruptions and the lingering shortage of semiconductor chips. Granting temporary LIFO relief due to these pandemic-related conditions will strengthen the retail auto industry and protect the investments and jobs in the local economies they serve,” said Zach Doran, President, Ohio Automobile Dealers Association (OADA).
Brown has been pushing for action to support American semiconductor production, which is key to supporting investments in Ohio’s manufacturing. Just last month, Intel announced a $20 billion investment to build a semiconductor plant in New Albany, which is expected to create 10,000 jobs. The House-passed America COMPETES Act will boost Intel’s initial investment to create thousands of additional jobs in Ohio. The America COMPETES Act contains Brown’s Leveling the Playing Field 2.0 Act as well as the CHIPS for America Act. The package will make a once-in-a-generation investment in American science, technology and innovation to help the U.S. preserve its competitive edge.
Last year, Brown urged the Taiwanese government to continue working to mitigate the ongoing semiconductor chip shortage that has impacted American auto manufacturers, causing plants to idle and resulting in layoffs for workers throughout the auto industry’s supply chain.
In addition to leading the effort to secure tax relief for auto dealers under Section 473, Brown also recently introduced the Supply Chain Resiliency Act, which would alleviate current supply chain bottlenecks and prevent future disruptions by investing in American companies to reduce our reliance on long supply chains and ensure that critical products are made in America.
Letter was also signed by Ron Wyden (D-OR), Amy Klobuchar (D-MN), Patty Murray (D-WA), Angus King (I-ME), Catherine Cortez Masto (D-NV), Alex Padilla (D-CA), Chris Van Hollen (D-MD), Ben Cardin (D-MD), Tina Smith (D-MN), Richard Blumenthal (D-CT), Jacky Rosen (D-NV), Dianne Feinstein (D-CA), Tim Kaine (D-VA), Tammy Baldwin (D-WI), Raphael Warnock (D-GA), Debbie Stabenow (D-MI), Gary Peters (D-MI), and Bob Casey (D-PA).
The full text of the senators’ letter can be found here.