The GOP tax bill rewards offshoring – here’s what we can do to stop it

As a candidate, President Trump promised that the “Trump administration will stop the jobs from leaving America” and put American workers first. But the Republicans’ “Tax Cuts and Jobs Act” shows he’s abandoned that promise.

As we reach the six month anniversary of the tax bill’s passage, there’s no question about who wins from the legislation. To date, companies have spent 68 times as much rewarding wealthy shareholders through stock buy-backs as they have on one-time bonuses or wage hikes for their employees. Christmas has come early for the top executives and large shareholders of big banks, big pharma and other large corporations, while working families have been left holding the bag.

{mosads}Yet what’s troubling about the tax bill isn’t that it delivers a big corporate tax break and lines the pockets of those already doing well – which it does. It is that these multinationals and CEOs’ financial gains are coming at the direct expense of working families. Just look at the way the Republican tax bill rewards and incentivizes the offshoring of more American jobs.

The new law allows companies to pay half or less of the corporate tax rate on profits earned abroad as they would here at home, while also exempting from tax entirely a 10 percent return on tangible investments – such as plants and equipment – that are made overseas. As experts from the Tax Policy Center and the Institute on Taxation and Economic Policy (ITEP) assessed, this creates additional incentives and rewards for profits to be made overseas – in other words, accelerating the offshoring of jobs and operations. The Congressional Budget Office (CBO) agreed, noting that several provisions “may increase corporations’ incentive to locate tangible assets abroad.” Ultimately, many multinational corporations will pay little to nothing in U.S. taxes on their profits earned by shifting call centers and factories overseas.

Many of the companies that are among the biggest beneficiaries of the Republican tax bill, such as Wells Fargo, have already been closing American call centers and aggressively offshoring U.S. jobs. After shipping jobs overseas, these companies have been gifted billions of dollars in new tax breaks while being encouraged to offshore even more American jobs in the future.

Enough is enough.

We need to stop rewarding companies that ship jobs overseas and reverse the offshoring incentives embedded in the tax bill. The “No Tax Breaks for Outsourcing Act,” introduced in both the House (by Rep. Doggett) and Senate, would ensure that multinational corporations pay the same tax rate on profits earned abroad as they do in the United States, while eliminating the zero-tax rate on certain investments made overseas. Ending the preferential tax rate for offshore profits to ensure that companies pay the same rate abroad as they do in the U.S. would level the playing field for small businesses and companies with mostly domestic sales and operations, while removing the tax breaks that could accelerate offshoring. Our tax code should reward the creation of good jobs here in the U.S., rather than giving corporations breaks for killing American jobs.

This legislation also would also crack down on corporations’ efforts to avoid paying their fair share of taxes by booking profits in overseas tax havens. The CBO found that multinational corporations will continue exploit loopholes under the new law to artificially book offshore $235 billion in profits every year, on top of what they might save by moving jobs abroad.

Talking tax can make folks’ eyes glaze over, but it’s time we all took a clear-eyed view at how the GOP tax bill will not just reward big companies but also hurt working families and communities by incentivizing more offshoring.

In November 2016, former Goldman Sachs CEO and former Trump White House economic advisor Gary Cohn described in stark terms why companies offshore American jobs, saying, “We hire people there [in Bangalore] because they work for cents on the dollar versus what people work on in the United States.” This corporate sentiment isn’t going away on its own.

Let’s get behind the “No Tax Breaks for Outsourcing Act,” and recognize that American workers are worth more than the “cents on the dollar” calculations too many corporations are already exploiting to justify their damaging practices.

Rep. Lloyd Doggett represents the 35^th Congressional District of Texas and is Ranking Member of the Ways and Means Tax Policy Subcommittee. Chris Shelton is President of the Communications Workers of America.