Senate Democrats try to claim campaign issue, punish firms that move operations overseasBy Stephen Ohlemacher, AP
Tuesday, September 28, 2010
Senate Dems try to punish firms that export jobs
WASHINGTON — U.S. companies that close domestic plants and open new ones overseas would see their taxes increase under bill Democrats are bringing before the Senate Tuesday as part of the majority party’s closing argument of the midterm elections.
The legislation, which stands little chance of surviving a procedural vote, would also give companies that import jobs to the U.S. new tax breaks.
Republicans and possibly a few Democrats are expected to block the bill. They say the tax increases would make U.S. companies less competitive.
Political symbolism, not passing the bill, was the Democrats’ point in the final days before Congress bolts Washington for the campaign trail.
“This is part of the continuing focus on jobs,” Sen. Debbie Stabenow, D-Mich., told reporters.
All 435 House seats, 37 in the Senate and the Democratic majority in both houses is on the line Nov. 2.
Unable to hold the party together on President Barack Obama’s call to extend expiring middle class tax cuts, Democrats instead sought to demonstrate their commitment to helping the economy recover from recession.
“We’re just a few weeks away from an election,” said Sen. Dick Durbin, D-Ill. “I wish this election would be a simple referendum on the debate we’re having on the floor of the Senate right now.”
The bill at issue in the Senate would exempt companies that import jobs from paying the 6.2 percent Social Security payroll tax for new U.S. employees who replace overseas workers who had been doing similar work.
The two-year exemption would be available for workers hired over the next three years. The tax cut — estimated to cost about $1 billion — would be partially offset by tax increases on companies that move jobs overseas.
The bill would prohibit firms from taking deductions for business expenses associated with expanding operations in other countries. It would increase taxes on U.S. companies that close domestic operations and expand foreign ones to import products to the U.S.
Republicans dismissed the whole debate as a political ploy. They argued the tax cuts would be difficult to administer and the tax increases would hurt international corporations that employ U.S. workers.
“Let’s have votes on real job creation incentives and let’s get out of this gamesmanship,” said Sen. Chuck Grassley of Iowa, the top Republican on the tax-writing Senate Finance Committee.
The tax increases total $369 million over the next decade, according to a preliminary estimate by the nonpartisan Joint Committee on Taxation. Combined with the tax cut, the bill would add an estimated $721 million to the budget deficit over the next decade.
“We’re going to take away the incentives corporations have to send our jobs overseas, and give them powerful new incentives to keep American jobs in America,” said Senate Majority Leader Harry Reid, D-Nev. “Right now our tax code actually rewards corporations for offshoring jobs. It helps them pay the costs of closing their plants and offers them tax breaks if they move production to other countries.”
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