LIFO repeal once again misrepresented in White House budget proposal
February 10, 2016
The LIFO Coalition, a group of more than 120 organizations including trade associations representing manufacturing, wholesale distribution, and retail industries, as well as companies of every size and industry sector that employ the “last in, first out” (LIFO) accounting method, today commented on the inclusion of LIFO repeal in President Obama’s proposed budget for fiscal year 2017.
“The president’s budget indicates a fundamental lack of understanding about the importance of LIFO to businesses of all shapes and sizes in this country,” said Jade West, executive secretariat of The LIFO Coalition. “Repealing the accounting method to pay for other initiatives could lead hundreds of thousands of businesses to declare bankruptcy, lay off employees, or abandon expansion, not to mention the impact on the overall economy.”
LIFO is not a tax loophole. It is a lawful accounting method that best tracks the costs of inventory for thousands upon thousands of American businesses and ensures adequate cash flow to replenish those inventories for future sales. Repeal is not an option for the countless industries that rely on the accounting method, which has been approved by the IRS, SEC, and Congress for almost a century.
“Furthermore, President Obama’s proposed budget misrepresents the impact of LIFO repeal on deficit reduction and tax reform. If LIFO were to be misguidedly repealed, the negative effect on the economy would exceed any revenues it would raise. And, because most of the revenues result from a retroactive tax increase, repeal would not result in meaningful annual federal revenue to the government going forward, yet would be devastating to LIFO-users,” said West.
The LIFO Coalition is opposed to any measure that restricts or repeals the use of LIFO for American businesses.