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  • Posted on October 20th, 2010 Michael 2 comments

    There is a bill in congress, S.3816 – Creating American Jobs and Ending Offshoring Act, which has a stated goal of removing an incentive given to multinational companies to offshore jobs. The summary describes the bill as “This bill would give companies a two-year payroll tax holiday, reducing the amount of Social Security taxes they would have to pay, for new employees who replace workers doing similar jobs overseas…” In a time of high unemployment and an economy that is not creating enough new jobs, I thought this legislation would be a slam dunk and have broad support. Therefore, I was surprised to learn that the National Association of Manufacturers (NAM) actually opposes this legislation. NAM’s major concern is that the removal of a tax break for moving jobs offshore will put our multinational manufacturers at a disadvantage in penetrating new markets. There is also additional criticism, from both the left and the right that either the bill does not go far enough or is really just another tax on multi-national manufacturers.
    The opposition by NAM had me worried that the bill threw the baby out with the bathwater. I do think it is reasonable that some tax deferments be made for US base multinational manufacturers that need to develop manufacturing in other parts of the world to gain market access. I was perplexed to find that the bill actually addresses this concern and is only subject to jobs moved offshore that produce products that are imported back into the United States. In other words, if the offshore job is to gain access into other markets everything remains the same. If the offshore job is to produce goods for the U.S. market then that job should not be subsidized by our taxes. I could understand why multinationals would be against this bill, since it remove their incentive to offshore jobs.
    For the timing of the bill, it comes at a good time both politically and economically. Politically, it should play well with most voters, but will have a tough time with our elected officials who are tied to big business. Our voters just need to let their elected officials know what they want. Economically, we are starting to see some companies already starting to re-shore some manufacturing jobs. This could only help tip the scales for those companies looking for a better ROI on re-shoring jobs.
    Criticism calling this bill a tax might be technically correct, but it is disingenuous at best. This bill does not create any new tax; it just removes a tax deferral for moving a job offshore and provides a tax break for moving that job back to the United States. Other criticism is that after the two year tax break, companies will re-move the jobs back offshore. This is just speculation and if true, we can look to expand the tax break, but at least there will be no government sponsored incentive to move the jobs back offshore.


    2 responses to “”

    1. I can not believe that anyone would not vote for this bill. That is unless they are in the pocket of big business.

    2. Many of the jobs that get moved off shore are going anyway. Why do we need to then have tax payers pay for it? Because politicians need campaign donations.

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