Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - January 15, 2009)

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By Mr. DORGAN (for himself, Ms. MIKULSKI, Mr. FEINGOLD, Mr. DURBIN, Mr. JOHNSON, Mr. BROWN, Mr. LEAHY, Mr. HARKIN, Mr. KENNEDY, Mr. WHITEHOUSE, Mr. KOHL, Ms. STABENOW, and Mrs. FEINSTEIN):

S. 260. A bill to amend the Internal Revenue Code of 1986 to provide for the taxation of income of controlled foreign corporations attributable to imported property; to the Committee on Finance.

Mr. DORGAN. Mr. President, today I am introducing legislation with Senator Mikulski and 10 of our colleagues that I hope will be added to any economic stimulus package considered by Congress in the coming weeks. This bill will put the brakes on a tax break granted to U.S. companies that move U.S. jobs offshore.

The U.S. economy is facing its most serious financial challenge since the Great Depression, and we must respond aggressively. I think a new economic stimulus plan is urgently needed to help prevent the economy from sliding deeper into a long-term recession. I agree with those who say that a major goal of the stimulus package should be to create more jobs, but I think we also have an opportunity to make a change to ensure that we keep the jobs we already have.

Employers have been slashing jobs at an alarming rate--2.6 million jobs last year--to reduce operating costs. The manufacturing and construction sectors have been particularly hard hit during this downturn. The manufacturing sector laid off 791,000 workers in 2008, continuing the disturbing loss of more than 4 million U.S. manufacturing jobs since the end of 2000. Federal tax laws have contributed to this problem.

There is one thing that Congress can do immediately to stem the loss of more manufacturing jobs: repeal the perverse tax subsidy in the Federal Tax Code for U.S. companies that move manufacturing operations and American jobs overseas. Not only will this help keep good-paying manufacturing jobs here at home, it will save American taxpayers more than $15 billion in revenue over the next decade.

Unbelievably, there is an insidious tax subsidy that rewards U.S. firms that move their production overseas and then turn around and import those now foreign-made products back to the United States for sale. When a U.S. company closes down a U.S. manufacturing plant such as Huffy bicycles or Radio Flyer little red wagons, fires its American workers and moves those good-paying jobs to China or other locations abroad, U.S. tax law actually provide those companies with a large tax break called deferral--allowing them to avoid paying any U.S. income taxes on their foreign earnings until those profits are returned, if ever, to this country. If a company making the same product decides to stay in this country, on the other hand, it is required to pay immediate U.S. taxes on the profits it earns here.

Repealing this jobs export tax subsidy will not hinder the ability of U.S. firms to compete against foreign competitors in foreign markets, as some special interests have claimed. It is targeted only to U.S. firms that move production abroad and then turn around and ship those products back to this country for sale.

If there was ever a tax policy change that would help save U.S. manufacturing jobs and should be part of a robust economic stimulus plan, this is it. I urge my colleagues to cosponsor this legislation. With a new Congress and administration in place, now is the time to kill this ill-advised tax subsidy once and for all. I look forward to working with my colleagues on this important tax policy matter in the coming weeks.

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