Perry Announces Plan to Create Jobs in Maritime Sector

Press Release

Says changes in tax policy can improve our ability to compete

Jeff Perry, candidate for Congress, today outlined his plans to change federal tax policy to encourage growth in the maritime industry and create additional maritime employment opportunities as one of his economic priorities.

The maritime industry is vitally important to the economy of Southeast Massachusetts and Cape Cod. Both Mass. Maritime Academy and the Quincy Shipyard support quality jobs for South Shore residents, and they also open up a number of sub-industries to even more job growth across the 10th Congressional District.

"Our federal tax laws and policies should strongly encourage private investment in the maritime sector and shipping industry," said Perry. "Congress can and should do a better job of creating employment opportunities for maritime workers. Should I have the honor of serving in Congress next term, I will support improvements in our tax laws designed to foster growth of the maritime industry so we can preserve and create additional jobs for people in the 10th Congressional District."

Perry's plan for maritime economic growth focuses on several specific areas of federal tax policy which are critical to the success of the industry:

* Ending multiple taxation of domestic waterborne cargo - Perry has announced his support for legislation to end the multiple taxation of intermodal and other non-bulk cargo being moved from seaport to seaport.

Currently, federal law charges a Harbor Maintenance Tax of one-eighth of one percent of a cargo's declared value each time cargo enters a seaport. This tax creates an incentive for shippers to move cargo by rail or by truck instead of by water, since cargo shipped from port to port by sea is taxed each time it enters a new port. Applying the tax only to waterborne cargo entering the United States for the first time would increase the use of maritime shipping and thereby create employment opportunities.

"Eliminating multiple application of the Harbor Maintenance Tax is one of the most direct ways we can grow jobs in the maritime sector," said Perry. "By reducing the cost of maritime shipping, we can create additional demand for its use and thereby increase employment opportunities."

* Increasing Investment in the Shipping Fleet -- Perry also has announced his support for the repeal of an antiquated provision of the Internal Revenue Code that requires American shipping companies to reinvest their foreign shipping income overseas, instead of investing it within the United States. "This legislation would increase investment in U.S. Flag vessels and use shipping income to fund American job growth instead of growth overseas," said Perry.

In addition, Perry has called for changes to Title VI of the Merchant Marine Act of 1936 which would allow shipping companies to withdraw money from tax-deferred Capital Construction Funds for the maintenance and repair of vessels in American shipyards. "We currently allow such withdrawals for the construction of ships, and it only makes sense for them to be allowed for maintenance and repair," said Perry. "This will enhance the competitiveness of our marine fleet and also create additional marine industry jobs."

* Merchant Mariner Foreign Source Income Exclusion -- Recognizing the importance of using tax policy to promote the American flag vessel fleet, Perry has called for the adoption of a foreign income exclusion for merchant mariners.

Federal tax law allows Americans working overseas to exclude up to $80,000 of their income from taxation. However, the exclusion does not apply to American merchant mariners working on U.S. flagship vessels overseas. This places the American fleet at a competitive disadvantage, since most foreign fleets operate in tax-free environments.

"Extending this one exclusion to merchant mariners would reduce shipping costs and help to encourage employment in the marine industry," said Perry. "It's also a matter of basic fairness that the same rules should apply to foreign workers, whether they're on the sea or on the land."

* Expand Application of the Tonnage Tax -- Similarly, Perry has called for revision of the tonnage tax, which taxes U.S. Flag vessels' income based on tonnage instead of using the corporate tax rate. Current law prohibits the tonnage tax from being applied to income from foreign trade if a shipper operates in American domestic trade for more than 30 days out of the year. Removing this prohibition would level the playing field and help American vessels to compete for foreign business, thereby creating additional shipping jobs.

* Maritime Security Program (MSP) Fleet -- In addition to supporting economic growth, Perry believes the maritime industry has important consequences for homeland security and national defense. He therefore has announced his support for continued funding of the Maritime Security Program, which helps to maintain a fleet of sixty vessels that are militarily-useful but privately-owned. "These vessels are vital to ensure adequate military sealift capacity for the Department of Defense," said Perry. "The Maritime Security Program makes sure our nation has access to sufficient defense capability while also maintaining that capability using American jobs and materials, instead of hiring-out foreign resources in time of need."

According to a 2006 study by UMass Dartmouth, the Massachusetts marine technology industry employs about 8,900 people. The total economic impact of the marine science and technology industry in Massachusetts, including spin-off effects, was $3 billion in sales of products and services, 22,400 jobs, and $1.3 billion in payroll. This total economic impact is approximately one percent of the state's gross state product.

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