Showing posts with label INCENTIVES FOR KEEPING MANUFACTURING JOBS IN THE U.S.. Show all posts
Showing posts with label INCENTIVES FOR KEEPING MANUFACTURING JOBS IN THE U.S.. Show all posts

Monday, February 13, 2012

OBAMA ADMINISTRATION PROPOSES CHANGING INCENTIVES TO INCREASE DOMESTIC MANUFACTURING

The following excerpt is from the Department of Treasury website: INCENTIVES FOR EXPANDING MANUFACTURING AND INSOURCING JOBS IN AMERICA PROVIDE TAX INCENTIVES FOR LOCATING JOBS AND BUSINESS ACTIVITY IN THE UNITED STATES AND REMOVE TAX DEDUCTIONS FOR SHIPPING JOBS OVERSEAS Current Law Under current law, there are limited tax incentives for U.S. employers to bring offshore jobs and investments into the United States. In addition, costs incurred to outsource U.S. jobs generally are deductible for U.S. income tax purposes. Reasons for Change On January 11, the White House released a report that details the emerging trend of "insourcing" and how companies are increasingly choosing to invest in the United States. For example, real business fixed investment has grown by about 18 percent since the end of 2009. In the past two years, over 400,000 manufacturing jobs have been created, while manufacturing production has increased by about 5.7 percent on an annualized basis since its low in June of 2009, its fastest pace in a decade. In addition, continued productivity growth has made the United States more competitive in attracting businesses to invest and create jobs by reducing the relative cost of doing business compared to other countries. The Administration would like to make the United States more competitive in attracting businesses by creating a tax incentive to bring offshore jobs and investments back into the United States. In addition, the Administration would like to reduce the tax benefits that exist under current law for expenses incurred to move U.S. jobs offshore. Proposal The proposal would create a new general business credit against income tax equal to 20 percent of the eligible expenses paid or incurred in connection with insourcing a U.S. trade or business. For this purpose, insourcing a U.S. trade or business means reducing or eliminating a trade or business (or line of business) currently conducted outside the U.S. and starting up, expanding, or otherwise moving the same trade or business within the United States, to the extent that this action results in an increase in U.S. jobs. While the creditable costs may be incurred by the foreign subsidiary of the U.S.-based multinational company, the tax credit would be claimed by the U.S. parent company. A similar benefit would be extended to non-mirror code possessions (Puerto Rico and American Samoa) through compensating payments from the U.S. Treasury. In addition, to reduce tax benefits associated with U.S. companies’ moving jobs offshore, the proposal would disallow deductions for expenses paid or incurred in connection with outsourcing a U.S. trade or business. For this purpose, outsourcing a U.S. trade or business means reducing or eliminating a trade or business or line of business currently conducted inside the United States and starting up, expanding, or otherwise moving the same trade or business outside the United States, to the extent that this action results in a loss of U.S. jobs. In determining the subpart F income of a controlled foreign corporation, no reduction would be allowed for any expenses associated with 28 moving a U.S. trade or business outside the United States. For purposes of the proposal, expenses paid or incurred in connection with insourcing or outsourcing a U.S. trade or business are limited solely to expenses associated with the relocation of the trade or business and do not include capital expenditures or costs for severance pay and other assistance to displaced workers. The Secretary may prescribe rules to implement the provision, including rules to determine covered expenses. The proposal would be effective for expenses paid or incurred after the date of enactment.”

Search This Blog

Translate

White House.gov Press Office Feed