Americans, in the future, could get a credit of up to $5,000 to shop. The new tax credit to shop aims to encourage people to shop for American-made products. Moreover, the credit aims to encourage shoppers to shop from small businesses in the U.S.
What’s the need for the Made in the USA Tax Credit Act?
Last week, Representatives Ro Khanna of California and Debbie Dingell of Michigan introduced a bill called the Made in the USA Tax Credit Act. If approved, individual shoppers will get up to $2,500, while couples will get up to $5,000 in a new tax credit to shop. The credit amount has been tied to inflation to keep pace with economic changes.
The primary objective of the bill is to boost American manufacturing by offering a credit to shoppers to purchase goods that are in accordance with the FTC’s (Federal Trade Commission) Made in the USA standards. The credit is exclusive to products from small businesses (those with less than 500 employees) and excludes luxury items, tobacco, firearms and vehicles.
“I’m proud to introduce the Made in the USA bill with Rep. Khanna to encourage consumers to support the family-owned small businesses here in our communities, and to look to American products first,” Dingell said in a press release.
Further, Dingell noted that American manufacturing has been on the decline since 1998. The decline in manufacturing and the rise in imports has resulted in the closure of more than 70,000 factories across the nation.
In addition to offering a tax credit to shop, the bill will set aside funds to help the IRS inform and educate consumers and businesses in underserved communities about this program.
Tax credit to shop: who will get it?
Besides supporting small businesses, the Made in the USA Tax Credit Act sets eligibility standards for individuals and couples to ensure support for the broader base of consumers.
To qualify for the new tax credit to shop, individuals must earn below $125,000 per year and have an investment income of less than $20,000, while the threshold for annual income and investment income for couples filing jointly is $250,000 and $40,000, respectively.
Representatives Khanna and Dingell have introduced the bill to the House Committee on Ways and Means. The Made in the USA Tax Credit Act needs to be approved by the House, the Senate and President Joe Biden to become law.
Giving incentives to consumers to buy domestic goods is not a common strategy, but many countries have developed programs to boost the production of domestically produced goods.
Japan, for instance, launched the “Cool Japan” initiative to promote Japanese products and culture. Similarly, Canada has a “Buy Canadian” program to boost the demand of Canadian food products. In 2014, India also launched the “Make in India” initiative, which, along with encouraging local production, carries consumer domestic purchasing incentives as well.
