This week the U.S. Senate is expected to consider the Bring Jobs Home Act S. 3364 [H.R. 5542]. Congresswoman Tammy Baldwin is a co-sponsor of the House version of the bill which would end tax breaks for firms that move jobs or businesses overseas. Instead, the Bring Jobs Home Act would provide a tax credit equal to 20% of the cost associated with bringing jobs and business activity back to the U.S. At the moment, companies can take tax deductions for most business expenses, including closing factories in America, even if the company later opens up a factory in China.
Currently, none of the GOP Candidates for U.S. Senate has taken a stand on the issue of outsourcing, unfair trade deals and China’s cheating. However, all the Republican candidates support the Ryan budget plan, which could encourage offshoring. According to the Tax Policy Center, Ryan’s proposal to exempt offshore earning from U.S. tax liability “might encourage some domestic companies to move more of their operations — and shift both jobs and more reported income — to low tax countries.” Similarly, Citizens for Tax Justice concluded that adopting this type of system would increase the incentives for job offshoring. [National Journal, 3/20/12; Wall Street Journal, 3/19/12; Tax Policy Center, 2/28/12; Citizens for Tax Justice, 10/19/11]
“Tammy Baldwin is a leader in Congress on this effort to end tax breaks for companies that ship our jobs overseas. It’s time for the Republican candidates for U.S. Senate take a stand against outsourcing Wisconsin jobs. They need to let voters know if they support ending these tax breaks or will they stand with Congressional Republicans in opposing providing tax credits for businesses to create jobs in Wisconsin,” said Democratic Party of Wisconsin Chair Mike Tate on Tuesday.
Sen. Stabenow’s bill would end the ability of companies to take tax deductions related to closing a business entity in the U.S. and opening a factory abroad. Instead, it would provide a tax credit equal to 20% of the costs associated with bringing jobs and business activity back to the U.S. The savings from ending tax deductions for companies outsourcing would be used to pay for the new tax credits for companies who insource jobs.
BACKGROUND ON INSOURCING
- 94% of voters support tax benefits for businesses that innovate and produce here. [AAM, 6/20/11]
- 59% agree that the United States must “get tough with China and use every possible means to stop their unfair trade practices.” [AAM, 6/20/11].
- 79% of Independents support giving tax breaks to US corporations that bring manufacturing jobs back to the U.S. from overseas. [Gallup, 1/12/12]
Manufacturing has been declining over the last 30 years. And in 2010, China surpassed the U.S. as the world’s largest manufacturer.
- Output is down: Over the past decade manufacturing output has declined in 15 of 19 sectors. [Third Way, 10/2011]
- Employment is down: In 1969 manufacturing accounted for 26% of national employment, but by 2011, it only accounted for about 9% of U.S. employment. [Third Way, 10/2011]
- In the last decade alone, 5.5 million manufacturing jobs were lost– nearly a third of the entire manufacturing workforce.
Other countries’ manufacturing sectors are surpassing the U.S.:
- In 2010, China surpassed the U.S. as the world’s largest manufacturer, ending America’s 110-year dominance in manufacturing. [Third Way, 10/2011]
- China made as many manufacturing jobs in four years as exist in the United States. [Information Technology & Innovation Foundation, 4/26/11]
Manufacturing lays the foundation for insourcing and job growth
- Although the manufacturing sector has shrunk over the years, bringing back manufacturing jobs, or at least ending policies that encourage the outsourcing of manufacturing jobs, is key to our economic recovery. For example, manufacturing still accounts for 12% of our economy and about 12% of U.S. employment. It employs over 11.5 million people. [Center for American Progress,4/2011; The White House, 3/27/12]
- The manufacturing sector comprises two-thirds of industry investment in research and development. [Third Way, 10/2011]
- The manufacturing industry employs nearly 64% of the country’s scientists and engineers. [Third Way, 10/2011]
- Manufactured goods make up 57% of U.S. exports. [Third Way, 10/2011]
- Each job created in manufacturing leads to the creation of 2.91 additional jobs, compared to 1.54 jobs in business and .88 in retail trade. [Third Way, 10/2011]
- Every job created in electronic computer manufacturing leads to 15 other jobs throughout the economy. [Third Way, 10/2011]