LIFO (which stands for “last in, first out”) is an inventory accounting method used by countless manufacturers, wholesalers, retailers and other businesses throughout the United States. LIFO is not a tax loophole, as some have claimed – it is an accounting method. But the Administration and some in Congress have put forth proposals that would repeal LIFO as a way to increase federal tax revenue.
This new revenue that is touted by supporters of LIFO repeal comes in the way of RETROACTIVE TAXES. Businesses that use LIFO would have to give back to the government tax benefits they received from LIFO as many as 60 or 70 years ago - benefits they were promised they could keep as long as they remained in business.
This is a critical issue for the survival of business owners who use the LIFO inventory method. LIFO should not be repealed as part of any deficit reduction effort, in exchange for a reduction in income tax rates as part of a revenue neutral tax reform program, or to raise revenues to pay for other spending programs. Repealing LIFO would put JOBS AT STAKE and irreversibly damage businesses by forcing them into debt to pay these retroactive taxes, causing lasting harm to the American economy and employment. Further, LIFO repeal would significantly hinder the competitiveness of U.S. businesses in the worldwide marketplace.