Democrats Introduce Bill to End Outsourcing of Jobs Overseas
Throughout the last two years, U.S. workers have faced some of the toughest challenges since the Great Depression. The manufacturing sector, in particular, has witnessed huge job losses across the country. For example, since 2000, Ohio has seen more than 250,000 jobs evaporate. Despite these dramatic losses, manufacturing continues to be the bedrock of some states’ economies.
Democrats believe we need to do everything we can to stop companies from sending American jobs overseas. Some of these offshoring companies even force American workers to train their foreign replacements — robbing hard-working Americans of their economic security and their dignity, just to drive up profits. Republicans, alternatively, are protecting these offshoring companies and their CEOs, voting against closing tax loopholes that reward companies for shipping jobs overseas.
Senate Democrats have responded to this crisis with commonsense legislation that will provide tax cuts for companies that create American jobs and create disincentives to moving American jobs overseas.
Specifically, the Creating American Jobs and Ending Offshoring Act would:
- Provide a payroll tax cut for companies that return jobs to the United States from overseas; and
- End tax loopholes that encourage the off-shoring of jobs.
For more specifics on the bill’s major provisions:
Incentives to Create American Jobs
This legislation will create a payroll tax holiday for companies that return jobs to the U.S. from abroad. To be eligible, businesses must certify that the U.S. employee is replacing an employee who had been performing similar duties overseas. This payroll tax relief is available for 24 months for employees hired during the three-year period beginning September 22, 2010.
Disincentives to Moving American Jobs Overseas
The Creating American Jobs and Ending Offshoring Act creates two major deterrents for relocating American jobs to foreign countries.
First, this bill would eliminate subsidies that U.S. taxpayers provide to firms that move facilities offshore. Companies would not be allowed to take any deduction, loss or credit for amounts paid in connection with reducing or ending the operation of a trade or business in the U.S. and beginning or expanding a similar operation overseas. The Joint Committee on Taxation estimates that this provision will raise $277 million over ten years.
Second, this bill would end the federal tax subsidy that rewards U.S. firms that move their production overseas. Current law has inadvertently promoted the system of “deferral” — where U.S. companies can defer paying U.S. tax on income earned by their foreign subsidiaries until that income is brought back the U.S. The result of such a system puts these firms at a competitive advantage over U.S. firms that hire U.S. workers and make products at home. This bill would end such a practice. According to the Joint Committee on Taxation, this provision will raise $92 million over ten years.
A vote on the motion to proceed to the bill is expected for Tuesday, September 28, 2010 at 11:30am ET.