Can Tax Credits Bring Jobs Back to the U.S.?

July 17, 2012

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.

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