Thursday, January 24, 2013

US Debt Reduction Sequester Tax Solution #15: Tax on Shipping US Jobs Overseas and Tax Credit for Shipping Jobs Back to the US

I have three recommendations here which either fairly and wisely raising tax revenues from companies that move US jobs overseas or which give tax incentives for companies that do the reverse and move overseas jobs back to the US.  Yeah, this is both a carrot and a stick approach.

First, as a disincentive for Big Corp offshoring of US jobs, I think all separation costs and all other costs, resulting from a plant closing or other US business closing, or in which a US plant or other US business is moved offshore, should not be deductible for US federal income tax purposes by the corporation moving its US plant or other US business offshore.  This recommendation is included in the President's Framework for Business Tax Reform. 

Second, as another disincentive for Big Corp offshoring of US jobs, the US Big Corp manufacturer moving its plant overseas should get a reasonably computed and fair tax recapture of its very lucrative Domestic Production Activities Tax Deduction for all past years in which it received this very lucrative tax deduction (this tax deduction started in 2005).

I find it hard to understand how US Big Corp manufacturers can think it’s perfectly all right to continue to reap the enormous tax benefits from the Domestic Production Activities Tax Deduction, and then to coldly close US manufacturing plants by moving them overseas to a low wage, low environment standard, and/or low-taxed foreign country.

So, US citizens pay twice. First, they help finance these substantial Domestic Production Activities Deduction tax subsidies granted to US Big Corp Manufacturers. And then, they subsequently lose their jobs when these same manufacturing companies move their jobs overseas.

And then to pour salt on their open wounds, these same US Big Corp Manufacturers are now lobbying intensely for an 85% US tax holiday on their foreign earnings repatriation. Just incredible heartless greed.

And then third, as a keen incentive for US companies to move their foreign jobs back to the US, companies doing so should get a 20% US Federal Income Tax Credit for the expenses of moving operations back into the US, as is recommended in the President's Framework for Business Tax Reform. 

The overall net effect of these three proposals here is that there will be a very significant increase in US Tax Revenues, and thus also a like amount of very significant reduction in the US Debt.

And this is another case where a proposal that reduces the US Debt is also a significant higher-paying, full-time US job creator.