Senate to Consider Tax Credit for Bringing Jobs to U.S.
As President Barack Obama escalates his contention that Republican presidential candidate Mitt Romney supports policies that send jobs overseas, Senate Democrats want to advance a measure creating an incentive to bring jobs to the U.S.
The bill, sponsored by Michigan Democrat Debbie Stabenow, would give U.S. companies a 20 percent tax credit for the cost of moving jobs and investment to this country from overseas. It would deny companies a deduction for the expense of moving investment out of the U.S.
“We are now paying the cost of people who move jobs overseas as taxpayers, and people are appalled when they hear that,” Stabenow told reporters yesterday. A procedural vote on the measure is scheduled for tomorrow.
The nonpartisan Joint Committee on Taxation estimated that ending the deduction for moving operations overseas would raise $168 million over a decade, while the 10-year cost of the tax credit would be $255 million, meaning the measure would carry a net cost of $87 million over 10 years, said Stabenow spokesman Cullen Schwarz. Companies could continue to deduct moving expenses for jobs transferred to the U.S.
By comparison, the tax credit for rehabilitating historic structures -- one of the less expensive federal tax breaks -- costs the Treasury $2.9 billion over five years.
Stabenow and other Senate Democrats said today that they don’t think the ability to deduct moving costs is the sole reason companies move operations outside the country.
“It may not be the only thing,” she said, emphasizing the symbolic importance of the tax deduction. “It’s part of the equation overall about how serious we are” about generating domestic jobs.
Douglas A. Shackelford, a professor at the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School, said in an interview that “like all tax legislation” Stabenow’s proposal “probably is dead on arrival before the election.”
Senator Roy Blunt, a Missouri Republican and Romney’s chief Senate supporter, said he wasn’t sure if he would support the measure.
“I don’t believe it will produce much in the way of results,” Blunt said. “You might wind up creating a lot of obstacles for businesses of all sizes to do business for no real gain.”
If the bill doesn’t advance, the vote would still have the effect of requiring Republicans “to answer the question as to whether outsourcing is an acceptable business practice,” Senator Dick Durbin of Illinois, the chamber’s second-ranking Democrat, said in an interview.
In a Bloomberg National Poll conducted June 17-20, 78 percent of respondents cited U.S. companies investing in jobs overseas as a major reason why the unemployment rate hasn’t declined significantly in the past two or three years.
“It sells politically in certain places so I can certainly understand the political game,” Shackelford said, adding that decisions about whether to employ workers overseas were more complex than the outsourcing debate takes into account.
“It would be good if our political debate went beyond that level of crude assessment into more fundamental issues about how we can grow and expand our economy,” Shackelford said.
‘Make a Profit’
Senate Majority Leader Harry Reid, a Nevada Democrat, said today that companies’ “goal should be to make a profit.”
“If your company boosts profits by sending jobs overseas, that’s your right as a business owner,” Reid said. “American taxpayers shouldn’t subsidize your business decisions with outsourced jobs.”
Republicans on July 12 blocked a Democratic plan to provide tax breaks for hiring and capital investment in part because they were denied the chance to offer certain amendments.
The U.S. Chamber of Commerce opposes Stabenow’s bill on grounds it would harm economic growth and U.S. companies’ competitiveness, and make the tax code more complex.
The outsourcing proposal is the latest example of the Senate’s majority Democrats coordinating their legislative calendar with Obama’s campaign themes.
Obama’s campaign released a television ad July 14 accusing Romney, a former Massachusetts governor and head of the private equity firm Bain Capital LLC, of “outsourcing” jobs and stashing his money in offshore accounts. The ad, set to Romney singing the song “America the Beautiful,” is scheduled to air in nine battleground states.
Campaigning in southwestern Ohio July 16, Obama told supporters that the U.S. doesn’t “need a president who wants to ship more jobs overseas.”
Romney shot back at Obama, accusing the president of ignoring the plight of middle-income Americans while rewarding campaign donors with federal dollars that led to the outsourcing of U.S. jobs.
“This is a time when it’s good to be a friend of the Obama campaign, because you might be able to get some money for your business,” Romney said in Jackson, Mississippi, at a July 16 event that raised $1.7 million for his campaign. “But it’s not so good to be middle class in America.”
Long before Obama and Romney began sparring over the outsourcing issue, congressional Democrats have sought tax incentives for companies to create jobs in the U.S. instead of overseas. In September 2010, a similar Democratic proposal had no support from Republicans and fell short of the 60 votes needed to advance in the Senate.
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