A pair of Democratic lawmakers have introduced a bill aimed at reducing taxes for businesses that move jobs back to the U.S.
The bill, introduced by Congressman Bill Pascrell, D-N.J., and Sen. Debbie Stabenow, D-Mich., would provide a 20 percent tax credit to U.S. companies that bring jobs and business operations back to America, while ending tax breaks for companies that send jobs overseas.
The Bring Jobs Home Act builds on President Obama’s push to encourage more “insourcing” of jobs to boost the U.S. economy (see Obama to Propose ‘Insourcing’ Tax Incentives). On Tuesday, Obama called on Congress to pass the lawmakers’ tax cut proposal. Stabenow and Pascrell announced their plans to introduce the legislation last week in their home states.
"Passing the Bring Jobs Home Act will stop our Tax Code from providing corporate welfare by closing the loopholes that encourage outsourcing, and give incentives to businesses to reverse the flow of jobs back home," Pascrell, a member of the House Ways and Means Committee, said in a statement. "The light at the end of the economic recovery is powered by manufacturing; we cannot stand around while our manufacturing base continues to erode. Our ability to produce goods here at home is the key to America keeping its competitive edge in the world market."
The bill would create a new tax cut to provide an incentive for U.S. companies to move jobs and business activity from another country back to America. Companies would be able to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the United States under the proposal.
The bill would also end a tax deduction for companies that outsource jobs and business activity. The cost of moving personnel and components of a company to a new location is currently defined as a business expense that qualifies for a tax deduction. The legislation would keep this deduction in place for companies that bring jobs and business activity back home, but businesses would no longer be able to qualify for this tax benefit for shipping jobs overseas.
“We need to be exporting our products, not our jobs,” said Stabenow. “Instead of letting companies use tax loopholes that help them ship jobs overseas, we need to be cutting taxes for companies that create jobs in America. It’s time to stop rewarding companies that send jobs to other countries and instead support businesses creating jobs here at home.”
Obama listed the bill as one of the items on Congress’s “To-Do List” to create jobs and restore middle-class security. “At the moment, companies get tax breaks for moving factories, jobs and profits overseas,” Obama said during a speech at the College of Nanoscale Science and Engineering at the State University of New York in Albany on Tuesday. “They can actually end up saving on their tax bill when they make the move. Meanwhile, companies that choose to stay here are getting hit with one of the highest tax rates in the world. That doesn’t make sense. …Before we completely rework the Tax Code, before we've done a full-blown tax reform, at the very least what we can do right away is stop rewarding companies who ship jobs overseas and use that money to cover moving expenses for companies that are moving jobs back here to America. So we're putting that on Congress’s ‘To-Do’ list.”
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