Ending Tax Breaks For Outsourcing & Giving Businesses Tax Credits For Bringing Jobs to the U.S. (H.R. 685)
Do you support or oppose this bill?
What is H.R. 685?
(Updated May 9, 2018)
This bill — known as the Bring Jobs Home Act — would deny tax deductions for outsourcing expenses incurred in relocating a U.S. business outside the country, and grant businesses a tax credit for up to 20 percent of insourcing expenses incurred for eliminating an overseas business and relocating it within the U.S. Before claiming the tax credit for insourcing expenses, the business would have to increase their employment of full-time workers in the U.S.
Current law considers the cost of moving personnel and components of a company to a new location to be a business expense that’s eligible for a tax deduction.
Argument in favor
American companies shouldn’t be rewarded with tax deductions when they outsource jobs overseas. Ending that tax break while creating a tax credit for businesses that bring jobs back to the U.S. would help the economy.
Argument opposed
Politically-motivated changes to our overly complex tax code are a bad idea, and this bill is no different. It would encourage businesses to set up operations overseas, then close & relocate them to the U.S. with the help of the tax credit.
Impact
Businesses outsourcing or insourcing jobs; and the federal government.
Cost of H.R. 685
A CBO cost estimate is unavailable.
Additional Info
In-Depth: Sponsoring Rep. Bill Pascrell (D-NJ) introduced this bill to keep American jobs from being outsourced overseas and encourage businesses to bring foreign jobs to the U.S.:
“When companies move overseas… we actually give them a reward, we give them a tax break for the cost of moving. Do you think that’s going to impede or help people decide whether they should stay or go? A tax break for leaving. The average citizen never gets that kind of a break… We need to stop offshoring these jobs.”
In an op-ed expressing opposition to an earlier version of this bill Edward Glaeser, a Harvard University economics professor, wrote that the legislation would create “bizarre corporate incentives” and offered an example:
“Image a company that’s deciding between establishing a factory costing $1 million in Honduras and establishing a $10 million factory in Massachusetts. The greater productivity here might well offset the higher costs. But under the Bring Jobs Home Act, a smart company would open first in Honduras, then shut down and then relocate to the Bay State. The firm would get $2 million in tax credits, which would more than offset the cost of the Honduran operation. The tax code would encourage businesses to start a foreign operation first — by subsidizing the cost of later switching to the United States.”
This legislation has the support of 13 Democratic cosponsors in the House.
Media:
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Sponsoring Rep. Bill Pascrell (D-NJ) Floor Speech
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Boston Globe (Op-Ed - Opposed)
Summary by Eric Revell
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