A vote is expected this week on the Bill 2884 -- Bring Jobs Home Act.
Introduced May 8th and sponsored by Sen. Debbie Ann Stabenow, the bill is offering businesses some tax incentives in order to encourage them to bring jobs back from outside the U.S.
The provisions will:
(1) grant business taxpayers a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the United States and relocating it within the United States
(2) deny a tax deduction for outsourcing expenses incurred in relocating a U.S. business outside the United States. Requires an increase in the taxpayer's employment of full-time employees in the United States in order to claim the tax credit for insourcing expenses.
While it might work and might pass, it is the overall economic business analysis that drive companies to bring jobs back to the U.S.
Here is a case in point. In speaking with a large manufacturing company who had moved some operations from overseas back to the U.S., they pointed out to me that this was done based on "sound economic analysis." The politics of being the "good guys" for bringing jobs back wasn't really a factor. While it looked good and the company got good press, I was told in very clear terms it was in the long-term economic benefit of the company to bring back jobs to a factory that was very efficient and would positively affect the overall profitability of the company.
Would this company be swayed by tax credits? Perhaps, but I wouldn't put money on it.
Discuss this Blog Entry 2
Most certainly the perverse tax incentive to outsource should be ended. The US appears to be the only country that actively encourages the outsourcing of jobs thru tax policy
Now as the author suggests, would all companies insourcing/outsourcing decisions be based on tax policy alone? most likely not, nor should it be. Sound decisions should take into acccount transportation, inventory costs, supply chain disruptions, access to markets, engineering and management access to the shop floor, proximity to customers and suppliers, infrastructure, and a labor base with the skills and education needed.
However with that said, tax policy may indeed be one more reason to move an otherwise on the fence company to decide to keep or return jobs in the US and should be implemented in such a way as not to facilitate the offshoring. If a company does the analysis and still decides to outsource, fine, but do it on their own dime, not the taxpayer's, who should never be subsidizing the offshoring of US jobs, technology and industries
Well, chalk up another blow to US based mfg, the sentate didn't have enough votes to move forward with this legislation, the votes went largely along party lines. Republicans are now on record supporting taxpayer subsidies for job outsourcers, and you are on your own for reshorers andUS job creators
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