Creating American Jobs and Ending Offshoring Act S.3816

Democrats are still trying to pass the Creating American Jobs and Ending Offshoring Act S. 3816. The bill makes perfect sense: it's an incentive for businesses to keep jobs here in the US. Payroll tax relief would be rewarded to companies which hire employees domestically during a three-year period beginning September 22. Also, as a Senate Democratic aide states, there is a measure in the bill that "basically eliminates deferral of taxes for companies that move overseas but continue to sell products back in the United States." Additionally there is a measure pushed by Sen Dick Durbin (D-Ill.) that would eliminate the deduction companies can take for business expenses that are associated with moving businesses overseas. "In other words," the aide said, "You can't count the cost of moving your plant overseas as a business expense."

BUT! Of course the Republicans aren't for it because they want the economy to still be in bad shape for the November elections.

Here is the bulk of the bill:

Incentive to Create American Jobs

To encourage businesses to create jobs in the United States, the Creating American Jobs and Ending Offshoring Act provides businesses with relief from the employer share of the Social Security payroll tax on wages paid to new U.S. employees performing services in the United States. 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. The Joint Committee on Taxation has not yet scored this proposal.

Disincentives to Moving American Jobs Overseas

End Subsidies for Plant Closing Costs. The Creating American Jobs and Ending Offshoring Act eliminates subsidies that U.S. taxpayers provide to firms that move facilities offshore. The bill prohibits a firm from taking 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 starting or expanding a similar trade or business overseas. The bill would not, however, apply to any severance payments or costs associated with outplacement services or employee retraining provided to any employees that lose their jobs as a result of the offshoring. Firms can apply to the Treasury Secretary for relief from this rule for transactions that do not result in the loss of employment in the U.S. The Joint Committee on Taxation has not yet scored this proposal.

End Tax Break for Runaway Plants. The Creating American Jobs and Ending Offshoring Act ends the federal tax subsidy that rewards U.S. firms that move their production overseas. Under current law, U.S. companies can defer paying U.S. tax on income earned by their foreign subsidiaries until that income is brought back to the United States. This is known as "deferral." Deferral has the effect of putting these firms at a competitive advantage over U.S. firms that hire U.S. workers to make products in the United States. The bill repeals deferral for companies that reduce or close a trade or business in the U.S. and start or expand a similar business overseas for the purpose of importing their products for sale in the United States. U.S. companies that locate facilities abroad in order to sell their products overseas are unaffected by this proposal. The Joint Committee on Taxation has not yet scored this proposal.

News and Comment - No Job News