The United States has lost more manufacturing jobs over the previous decade than during the Great Depression. A decade of record trade deficits, the closure of more than 50,000 manufacturing facilities, the loss of nearly six million manufacturing jobs, and chronic trade deficits are troubling signs of the nation’s diminished industrial and innovative capability.
The BCTGM recognizes the critical steps the Obama Administration has taken to stabilize the economy by ensuring the survival of the domestic auto industry, investing in infrastructure and a diverse efficient clean energy economy, securing jobs from those investments with Buy America requirements, and putting critical financial reforms in place. However, the work is far from finished.
Other countries have a manufacturing strategy and they back it up by aligning their trade, tax, training and investment policies. We do not. If we want to rebuild our economy on a stronger foundation, we have to stop shipping good jobs overseas and start making things in America again. It is time to align our tax, trade, and public investment policies to support American manufacturing.
In a recent speech to the Center for National Policy, AFL-CIO President Richard Trumka identified the consequences. “First is the direct loss of jobs, purchasing power and tax base. The second threat is our diminished capacity to meet our own national defense manufacturing needs, especially in times of crisis. The third threat is the vulnerability of our economy to supply chain disruptions arising far from our shores,” notes Trumka.
There are three big things Congress can do now that will make a difference: Eliminate tax incentives that encourage U.S. companies to ship jobs overseas, end the system of tax deferral that allows American multinational firms to keep profits offshore and pass existing legislation to address currency manipulation by foreign governments.
TELL CONGRESS TO PASS THE BRING JOBS HOME ACT
The tax code currently allows companies moving operations overseas to deduct moving expenses – and reduce their taxes in the United States as a result. Congress needs to pass legislation that gives companies moving operations back to the U.S. a new 20 percent tax credit for moving expenses and pay for it by ending the tax break that allows companies to deduct expenses associated with moving operations overseas.
Senator Debbie Stabenow (D-Mich.) has introduced S. 2884 in the Senate, and Congressman Bill Pascrell (D.-N.J.) has introduced a companion bill H.R. 5542 in the House.
Senate action is expected on the legislation in early July. CLICK HERE to tell your member in the Senate it is time to pass the Bring Jobs Home Act (S. 2884)!
Eliminate Tax Incentives to Ship Jobs Overseas:
Congress needs to end the tax break that allows companies to deduct expenses associated with moving operations overseas, while still encouraging companies to assist displaced workers. In denying the deduction for outsourcing firms, the President’s plan does not count the cost of severance and re-training workers.
Reward businesses bringing jobs back to the United States:
Congress should create a new general business credit against income tax equal to 20 percent of the eligible expenses paid or incurred during closing down operations abroad and bringing jobs back to the U.S. In order to qualify for this credit, companies would have to reduce or eliminate a trade or business outside the United States and start up, expand, or move the same business to the United States.
END TAX DEFERRAL FOR OFFSHORE PROFITS
More than $1 trillion in untaxed U.S. corporate profits is being held offshore. The ability to hold these untaxed profits has been an incentive to offshore jobs and boost stock values. Many of the profits generated by these firms come from offshore production of goods sold in the U.S. market.
Tell Congress it is time to invest in America. Put an end to the tax deferral system once and for all and end tax holidays for repatriated overseas profits.
PASS CURRENCY MANIPULATION LEGISLATION
Trade deficits mean lost manufacturing jobs. The record U.S. trade deficit with China and the Chinese government’s growing foreign reserves tell the real story. In 2011 this deficit hit $295 billion and accounted for almost three-quarters of the total U.S. non-petroleum goods trade deficit.
A 2011 study by the Economic Policy Institute (EPI), Growing U.S. Trade Deficit with China Cost 2.8 million Jobs Between 2001 and 2010 (www.epi.org), finds that 2.8 million American jobs were lost or displaced in the last ten years because of the large and ever-growing trade deficit with China — a trade deficit fueled primarily by the Chinese government’s systematic and egregious currency manipulation.