Senate Democrats Make One Last Push At Jobs Bill
Hoping to turn the spotlight one more time on their efforts to solve the jobs crisis, Senate Democrats are planning to vote on a payroll tax incentive by the end of next week, leadership aides confirmed.
The bill, entitled "Creating American Jobs and Ending Offshoring Act," would provide payroll tax relief to companies which hire employees domestically during a three-year period beginning September 22.
The legislation is similar to the one President Obama has begun touting as a quick and politically palatable measure to encourage companies to hire new workers -- though the progressive economic community is skeptical that it will be effective.
"We hope to have a vote on it by the end of next week," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid (D-Nev.). "This bill is very different then previous bills we have taken to the floor. We are optimistic it is going to enjoy more support than previous efforts relating to shopping jobs overseas."
In addition to pushing the payroll tax holiday, the legislation includes another provision designed either to raise revenue or discourage companies from sending operations abroad. According to a Senate Democratic aide, there is a measure in the bill, introduced by Sen. Byron Dorgan (D-N.D.), that would "basically eliminates deferral of taxes for companies that move overseas but continue to sell products back in the United States." Additionally there is a measure pushed by Sen Dick Durbin (D-Ill.) that would eliminate the deduction companies can take for business expenses that are associated with moving businesses overseas. "In other words," the aide said, "You can't count the cost of moving your plant overseas as a business expense."
Such a proposal has long had championed on the Republican side of the aisle, including Sen. John McCain (R-Ariz.) during the 2008 presidential campaign. The expectation going into next week, however, is that Senate Republicans will balk at backing the measure, owing to the proximity of the 2010 congressional elections.
On the Hill, Democrats aren't necessarily worried about that development. As one Democratic aide put it, "we are trying to draw as sharp a contrast as possible... But there is at least a sense it could pick up Republican votes."
The bill will be the last push made by Senate Democrats on the employment front before the chamber adjourns for the final part of the election season. Leadership is bringing the bill to the floor next week in part because caucus members have made it known that they want a vote on some job-creating measure before they go home to their districts.
Below are the details of the bill:
Creating American Jobs and Ending Offshoring Act S. 3816
Incentive to Create American JobsTo encourage businesses to create jobs in the United States, the Creating American Jobs and Ending Offshoring Act provides businesses with relief from the employer share of the Social Security payroll tax on wages paid to new U.S. employees performing services in the United States. To be eligible, businesses must certify that the U.S. employee is replacing an employee who had been performing similar duties overseas. This payroll tax relief is available for 24 months for employees hired during the three-year period beginning September 22, 2010. The Joint Committee on Taxation has not yet scored this proposal.
Disincentives to Moving American Jobs OverseasEnd Subsidies for Plant Closing Costs. The Creating American Jobs and Ending Offshoring Act eliminates subsidies that U.S. taxpayers provide to firms that move facilities offshore. The bill prohibits a firm from taking any deduction, loss or credit for amounts paid in connection with reducing or ending the operation of a trade or business in the U.S. and starting or expanding a similar trade or business overseas. The bill would not, however, apply to any severance payments or costs associated with outplacement services or employee retraining provided to any employees that lose their jobs as a result of the offshoring. Firms can apply to the Treasury Secretary for relief from this rule for transactions that do not result in the loss of employment in the U.S. The Joint Committee on Taxation has not yet scored this proposal.
End Tax Break for Runaway Plants. The Creating American Jobs and Ending Offshoring Act ends the federal tax subsidy that rewards U.S. firms that move their production overseas. Under current law, U.S. companies can defer paying U.S. tax on income earned by their foreign subsidiaries until that income is brought back to the United States. This is known as "deferral." Deferral has the effect of putting these firms at a competitive advantage over U.S. firms that hire U.S. workers to make products in the United States. The bill repeals deferral for companies that reduce or close a trade or business in the U.S. and start or expand a similar business overseas for the purpose of importing their products for sale in the United States. U.S. companies that locate facilities abroad in order to sell their products overseas are unaffected by this proposal. The Joint Committee on Taxation has not yet scored this proposal.
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First Posted: 09/22/10 05:17 PM ET Updated: 05/25/11 06:50 PM ET