LIFO (Last-In, First-Out) is a widely-accepted inventory accounting used by large and small companies throughout the U.S. economy since 1938. LIFO is used by companies to determine book income and tax liability. Book income is the amount of earnings shown on business financial statements. Current rules require the use of LIFO for book purposes if it is used for tax purposes.
Virtually every WSWA member company uses the LIFO method. Under the Camp proposal, WSWA member companies would be forced to pay taxes on 20% of their reserves – all which are decades old and many dating to the repeal of Prohibition. This proposed retroactive tax on “closely-held” businesses would result in a tax increase of $2,642 per WSWA member company employee. In addition, repealing LIFO would mean higher future tax bills and which would make it more difficult for wholesalers to invest in the purchase of replacement inventory in the face of rising costs.