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No tax breaks for cutting jobs

October 19, 2010
By Sen. Carl Levin

WASHINGTON - The American people understand a simple truth: Our tax code should not encourage U.S. companies to send their jobs overseas. Yet too often, it does that, providing incentives for U.S. companies to move their operations overseas, eliminate U.S. jobs and import goods that they once employed Americans to make.

It's an unacceptable and unsustainable situation, and I and a number of other senators recently tried to end it. Unfortunately, the legislation we supported, the Creating American Jobs and Ending Offshoring Act, was blocked from consideration by a Republican filibuster. That's unfortunate, because this legislation would help prevent American workers from losing their jobs because American companies get tax breaks when they move jobs overseas.

The legislation would take two important steps to encourage job growth in the United States and boost our economic recovery. First, it would eliminate tax breaks that corporations claim in the process of sending U.S. jobs overseas.

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Sen Carl Levin

Under current law, companies are able to take deductions and otherwise reduce their taxes for expenses that they incur to shut down U.S. plants and move them overseas. Companies can also defer taxes they pay on the income of their foreign subsidiaries, which gives them a big tax savings.

The legislation we supported would have eliminated deductions and other breaks connected to closing a U.S. facility and moving it overseas. And companies would no longer have been able to defer taxes on the income from their overseas facilities after they close a U.S. facility and move it overseas. Combined, these provisions would have ended perverse incentives that allow companies to profit by moving American jobs offshore.

The bill would also have increased the incentives for companies to create jobs here at home.

Companies would have gotten relief from payroll taxes for employees here in the United States if those U.S. jobs were the result of moving production from overseas back home.

In effect, this legislation would have flipped what is now a system that encourages firms to ship U.S. jobs to other countries, and created a system where companies are encouraged to bring jobs home.

Surely Americans struggling to find work, or worried that the job they have will be moved overseas, deserve a tax system that works for them and not against them.

Some of my colleagues opposed this legislation because they feared it might violate our treaty obligations.

It is difficult to support this position, given the thousands of U.S. jobs lost because our trading partners fail to live up to their treaty obligations. I am in favor of trade. But I oppose unilateral disarmament when it comes to trade. It is our obligation to defend the interests of U.S. workers.

Ending the tax incentives that cost thousands of those workers their jobs is one way we can fulfill that obligation.

U.S. companies that do the right thing by their U.S. workers should not be at a competitive disadvantage relative to those companies that ship jobs overseas. U.S. tax law should not encourage companies to lay off hard-working Americans. I am disappointed that the Senate was blocked from taking up this important legislation and from ending the distorted incentives that are costing Americans their jobs, and I am hopeful that Congress can act soon to reverse those incentives so they favor American workers.


Carl Levin is the senior U.S. senator from Michigan.



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