Rep. Tom Perriello today voted in favor of H.R. 1586, the Education Jobs and Medicaid Assistance Act, a fully paid-for aid package to states that will keep teachers and first responders on the job and provide basic health care to those caught up in the economic downturn. The $26 billion aid package is paid for in part by closing the tax loopholes that encourage companies to send jobs overseas. Closing these loopholes has been a priority for Rep. Perriello who has voted and cosponsored legislation to close them several times.
"With the school year about to begin, we took action today to save 160,000 teaching jobs and another 150,000 jobs across America, including 437 teachers here in our community," said Rep. Perriello. "As a major bonus, today we also finally ended the sick tax loophole that rewards companies for sending American jobs overseas. This should have been simple victory for American workers and businesses, but I had to fight for months to finally make this happen."
In the 5th Congressional District, the aid package is expected to fund 437 teacher positions. The U.S. Department of Education estimates that the bill will save or create 3,800 teaching positions across Virginia and over 160,000 nationally.
Virginia will also receive approximately $289 million for its Medicaid program to help provide basic medical care to low-income Virginians. The economic downturn has put increasing stress on states' Medicaid programs as job losses lead to increased demand for services. Without federal assistance, Virginia would have to make further reductions in payments to Medicaid providers and restrict enrollment in the FAMIS program, meaning thousands of low-income children and mothers would have their health care taken away.
The bill extends enhanced Medicaid support to states that were originally enacted as part of the American Recovery and Reinvestment Act. The aid will be extended for six months with a gradual phasing down of the enhanced aid. In February 2010, 47 Governors, including Virginia Governor Robert F. McDonnell, wrote Congressional leadership asking for "assistance in protecting jobs and speeding economic recovery by extending the American Recovery and Reinvestment Act's (ARRA) enhanced federal match for Medicaid (FMAP) for two additional quarters."
In order to help pay for the aid to states, the Education Jobs and Medicaid Assistance Act eliminates tax provisions that encourage companies to ship jobs overseas, beginning in 2011.The current foreign tax credit is designed to prevent corporations from being taxed twice, once by the United States and once by a foreign country, for income that is earned abroad. However, companies have devised schemes that enable them to operate offshore with essentially little or no tax liability to either the U.S. or the foreign government. As a result, U.S. multinational corporations paid an effective U.S. tax rate of just 2% on their $700 billion of foreign earnings, far less than the average worker pays on their income. Foreign tax credit abuse is among the Internal Revenue Service's top compliance concerns for large corporate taxpayers.
The Senate previously passed the Education Jobs and Medicaid Assistance Act on August 5, 2010. It will now go to the President for his signature.