The Creating American Jobs and Ending Offshoring Act would keep companies from getting tax breaks for moving U.S.-based facilities overseas
(Bloomberg) — Senate Majority Leader Harry Reid moved to set up a vote on legislation that would give companies a tax break for hiring U.S. workers to replace overseas-based employees. The plan also would end tax advantages for closing U.S. plants to move jobs offshore.
The measure introduced by Reid, a Nevada Democrat, would give companies a two-year holiday from their share of Social Security payroll withholding taxes for each employee they hire to replace a worker at a foreign-based facility.
The Creating American Jobs and Ending Offshoring Act would bar companies from taking tax credits or deductions for the cost of closing a U.S.-based facility to move the operation overseas.
Companies could still take deductions for severance and job placement services for employees who lose their jobs as a result of a U.S. plant closing. Under the legislation, companies that close a U.S.-based business and expand it overseas would no longer be allowed to defer U.S. income taxes on foreign subsidiaries.
Current law allows companies to put off paying taxes on earnings from foreign subsidiaries until the income is brought to the U.S. Democrats say this gives companies that employ workers overseas an unfair advantage over those that hire more U.S. workers.
Reid has the option to set up a procedural vote next week on whether the Senate should take up the legislation. The measure is cosponsored by two other members of the Democratic leadership, Charles Schumer of New York and Dick Durbin of Illinois. North Dakota Democrat Byron Dorgan is the fourth sponsor.
The bill is S. 3816.