Jobs?

We are building a Maginot Line across our southern border with Mexico to control illegal immigration from Latin American nations, primarily to prevent crime and protect jobs.

Of course, these immigrants, in most cases, "take" jobs for which most US citizens do not seek. Middle-class Americans decry the large US companies that lay off skilled manufacturing and IT workers by outsourcing those positions outside our country. Voters are very responsive to complaints by Tea Party groups and Republicans that the Obama administration and Democrats in general have not yet overcome the loss of jobs that continues from the Great Recession.

It seems, though, that approaches offered by Democrats and Republicans to resolving the jobs crisis—and this is a jobs crisis—are contradictory and counter-productive. As a body, Republicans are using this crisis to backup their demand to continue the famed tax cuts for the wealthiest 1% of taxpayers that they passed during their Majority during the previous Administration. Democrats, on the other hand, have actually offered legislation to reduce the tax incentives that encourage outsourcing.

I don’t mention resolutions offered by Tea Party groups because…they haven’t offered any. Well, other than constantly repetitious calls to vote for anyone who is not a Democrat, that is.

Protect Job Outsourcing?

Both the US Chamber of Commerce and the National Association of Manufacturers oppose S3816. The Chamber declared it would be best to extend the Bush Administration tax cuts of 2001 and 2003. The NAM complained that the bill would increase taxes, lower competitiveness, and result in fewer US jobs.

Republicans in the US Senate have blocked consideration of S3816, the “ Creating American Jobs and Ending Offshoring Act,” offered by Senator Richard Durbin (D-Ill). The bill that would worked to curtail job outsourcing by US companies by:

• Exempting from employment taxes for a 24 months employers who hire an employee who replaces another employee who is not a citizen or permanent resident of the United States and who performs similar duties overseas.
• Denying any tax deduction, deduction for loss, or tax credit for the cost of an American jobs offshoring transaction.
• Eliminating the deferral of tax on income of a controlled foreign corporation attributed to property imported into the US by the corporation. (Property exported before its substantial use in the US and agricultural commodities not grown in the US in commercially marketable quantities would be exempted.)

Republicans scorned the legislation as political “gamesmanship.” The bill failed to advance on a vote of 53-45 to invoke cloture (that would have ended a filibuster)—a minimum of 60 affirmative votes were needed. Senator Durban commented:

“I wish this election would be a simple referendum on the debate we're having on the floor of the Senate right now.”

Opposed to Investing in American Jobs?

Yes. On July 29, House Republicans successfully opposed HR 5893, the “Investing in American Jobs and Closing Tax Loopholes Act of 2010,” introduced by Rep. Sander M. Levin (D-MI). The bill would have reformed the tax exemptions provided businesses on income from foreign sources. These provisions include:

• Suspend the recognition of foreign tax credits until the related foreign income is taken into account for U.S. tax purposes
• Deny a foreign tax credit for foreign income not subject to U.S. taxation due to a covered asset acquisition
• Apply a separate foreign tax credit limitation for each item of income that would be treated as derived from sources within the United States and that would be treated as arising from sources outside the United States under a treaty obligation
• Limit the amount of foreign tax credits that may be claimed by a U.S. domestic corporation with respect to a deemed dividend paid by a foreign subsidiary
• Prevent a reduction in earnings in profits of a foreign corporation in an acquisition if more than 50% of the dividends arising from such acquisition would not be subject to U.S. taxation or would be includible in the earnings and profits of a controlled foreign corporation
• Treat a foreign corporation as a member of an affiliated group for interest allocation and apportionment purposes if more than 50% of its gross income is effectively connected with a U.S. trade or business and at least 80% of either the vote or value of its outstanding stock is owned directly or indirectly by members of the affiliated group
• Repeal tax rules exempting foreign source income attributable to the active conduct of a foreign trade or business from withholding of tax requirements
• Treat as income received in the United States amounts received from non-corporate residents or domestic corporations with respect to guarantees and amounts paid by any foreign person if such amounts are connected with income that is effectively connected with the conduct of a trade or business in the United States
• Provide that the statute of limitations for assessing any tax on certain foreign transactions shall apply only to items related to a failure to provide information to the IRS due to reasonable cause and not willful neglect

The National Association of Manufacturers, the US Chamber of Commerce, and Americans for Tax Reform all oppose this legislation. ATR declared, in fact, that:

“A more rational system would tax on a territorial basis (only seeking to tax that income earned in the United States).”

Counterpoint

It seems to me that large, US-based international companies will move more and more jobs and factories outside of the US if the federal government taxes only income earned in the US.