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Leaders in Corrosion Control Technology Corrosion Prevention Tax Credit NACE Corrosion 2006 Front Page Issues March 13 th, 2006 San Diego, California.

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Presentation on theme: "Leaders in Corrosion Control Technology Corrosion Prevention Tax Credit NACE Corrosion 2006 Front Page Issues March 13 th, 2006 San Diego, California."— Presentation transcript:

1 Leaders in Corrosion Control Technology Corrosion Prevention Tax Credit NACE Corrosion 2006 Front Page Issues March 13 th, 2006 San Diego, California

2 Leaders in Corrosion Control Technology Office of Corrosion Policy and Oversight Establishment of a National Committee on Corrosion with NRC/National Academies Industry – Affect Policy to Warrant Investment in Corrosion Control Technologies

3 Leaders in Corrosion Control Technology

4 Special Program Note The governmental outreach initiative that we will describe today has only been tested to date with the US Congress. However, its concepts and processes can serve as a template for similar initiatives in countries throughout the world.

5 Leaders in Corrosion Control Technology Annual Direct Cost of Corrosion in the USA  3.1% of $9 Trillion US GDP (1998)  Greater than annual cost of all natural disasters in the USA (tornadoes, hurricanes, flooding)  Greater than the Agriculture component of the US GDP ($127 billion)  Greater than the Mining component of the US GDP ($106 billion)

6 Leaders in Corrosion Control Technology Economic Indicators –Business closures/job losses –Jobs and companies outsource to foreign countries –Decreased federal tax revenues

7 Leaders in Corrosion Control Technology Repair & rehabilitation alone creates waste –Hampers our ability to compete globally –Endangers public safety –Contaminates environment Waste/costs are avoidable using already fully developed corrosion prevention technologies –Creates & retains jobs –Increases productivity –Increases federal tax revenues Our Mantra

8 Leaders in Corrosion Control Technology Invest in the Future “ Request to Congress” Corrosion Prevention Tax Credit –50% Tax Credit on Corrosion Prevention Strategies Investments –Tax Credit to all businesses, in all industries based on new initiatives

9 Leaders in Corrosion Control Technology Corrosion Prevention Tax Credit Assuming Businesses Reinvest their Corrosion Savings

10 Leaders in Corrosion Control Technology Annual Cost of Corrosion$276,000,000,000 Potential Savings (1/3) 92,000,000,000 Cost to Implement Savings -9,200,000,000 Net Savings $ 82,800,000,000 (30%) Jobs created in corrosion technology field 128,800 Jobs created/retained due to reinvestment of tax savings 1,288,000 Annual Value of 1,416,800 new Jobs $56,672,000,000 Additional Tax Revenue Individual Rate) $ 10,200,960,000 Less 50% Federal Tax Credit for Corrosion Prevention -4,600,000,000 Net Tax Revenue Increase$ 5,600,960,000 US Treasury’s Return on Tax Credit 122% } 1,416,800 Asset Owner Model: US Treasury Model:

11 Leaders in Corrosion Control Technology Corrosion Prevention Tax Credit ROI to the US Treasury almost tripled if the savings are not reinvested

12 Leaders in Corrosion Control Technology Annual Cost of Corrosion$276,000,000,000 Potential Savings (1/3) 92,000,000,000 Cost to Implement Savings -9,200,000,000 Net Savings $ 82,800,000,000 (30%) Jobs created in corrosion technology field 128,800 Jobs created/retained due to reinvestment of tax savings -0- Annual Value of 128,800 new Corrosion jobs $ 5,152,000,000 Corporate Income (70% of Savings) $ 57,960,000,000 Additional Federal Tax Revenue (34% Corporate Tax Rate) $ 20,633,760,000 Less 50% Federal Tax Credit for Corrosion Prevention -4,600,000,000 Net Tax Revenue Increase$ 16,033,760,000 US Treasury’s Return on Tax Credit 349% Asset Owner Model: US Treasury Model:

13 Leaders in Corrosion Control Technology Tax Credit Results –Provides incentives for business to consider corrosion preventive strategies versus “find it and fix it” mentality –Allows U.S. businesses to become more competitive in world market by reducing wasted costs –Provides a favorable Federal tax revenue impact to the US Treasury Net tax revenue of >$5.6 billion Return on Tax Credit of >120%

14 Leaders in Corrosion Control Technology Congress’ Role Corrosion Prevention Investment Tax Credit Bill

15 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Bill Concept

16 A 50% tax credit will be granted for implementation of corrosion prevention strategies listed herein that are applied to new or existing metallic structures or assets that are buried, submerged, concrete-encased or atmospherically exposed that are permanently located in the US. To qualify for the tax credit, the corrosion prevention strategy must be conducted by providers who are headquartered in the USA and all components of the corrosion prevention system must be of US origin.

17 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill House Sponsors –Cong. Michael Fitzpatrick (R-8 th PA): Lead Sponsor –Cong. Al Green (D-9 h TX): Co-Sponsor –Endorsed by 2 environmental groups Ways and Means (protectors of the Tax Code) –Wm. Thomas (R-22 nd CA): Current Chairman –Jim McCrery (R-4th LA): Possible Incoming Chairman (2007) All Representatives (& Senators) will be important –We need 218 votes in the House to pass –Bill clearly has bipartisan appeal –Shame on anyone who does not support it! Bipartisan Focus

18 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill HR 4913 The Section will be called SEC 45N. CORROSION PREVENTION AND MITIGATION MEASURES, revision to the 1986 IRS Code ‘‘Corrosion Prevention Act of 2006’’

19 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Bill Language 1.Tax credit would be equal to 50 percent of qualified corrosion prevention and mitigation (cpm) expenditures

20 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Bill Language 2.The term qualified cpm expenditures applies to amounts paid for design, materials, application and installation

21 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Bill Language 3. A cpm system or component is qualified if certification is made by someone properly accredited in the technical area of concern

22 Leaders in Corrosion Control Technology Now What Referred to Ways and Means Committee Bill Thomas, Chr – CA (Bakersfield) Chr – Joint Committee on Taxation GAO, OMB, Hearing, Mark-up in Committee, Send to House Need 218 Votes in House of Representatives Send to Senate – Re-enter Committee Process Need 51 Votes and Match with House Bill President’s Desk

23 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Next Steps The Bill requires a Gatekeeper to ensure quality of the Tax Credit implementation Determine a means for NACE to provide Tax Bill specific training and/or certification

24 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill A Call for NACE Membership Action! NACE Congressional “Blitz” –Promote benefits of Bill by local members with selected congressmen Letter ( ) writing campaign –Advocate Kiosk Personal meetings (individuals) Meet-n-Greets (groups) NACE “Legislative Days”

25 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Challenges 1.Distractions in Washington War on terror/Iraq; Port Security; Lobbying Reform; 2006 elections 2.GY 2006 Budget Deficit 3.Corrosion lacks “sex appeal”

26 Leaders in Corrosion Control Technology Corrosion Prevention Tax Bill Timeline... “A lesson in patience!” 9/02 Spring 03 Summer thru Fall /05 Cost of Corrosion Study Delivered to Congress Congressional Affairs Sub Committee Formed Initial NACE Tax Bill Strategy Drafted Summer 04 thru Spring 05 NACE Tax Bill concept tested on Congress and refined NACE Legislative Day May 05 to March 06 Bill Drafting Future Diligent Follow Up 3/06 Bill Introduced in House

27 Leaders in Corrosion Control Technology Good Government Good Citizenship Rising above the storm: We must work together + Members + =


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