Hatch on the Bringing Jobs Home Act: “Economic Patriotism” Means Making America Better for Business
In Speech on Senate Floor, Utah Senator Says, “The Democrats – both in the Senate and the White House – think they gain some traction by talking about “economic patriotism” and trying to paint Republicans as the party of outsourcing. This bill is yet another election-year gimmick, pure and simple. And, quite frankly, the American people are tired of gimmicks. What they want are serious solutions to the problems ailing our country."
WASHINGTON – In a speech on the Senate floor today, Finance Committee Ranking Member Orrin Hatch (R-Utah) called on Congress to debate real reforms that make America a better place for business and job creators instead of playing election year political games.
“This will be an opportunity to show whether the Senate Democratic Leadership is serious about creating jobs and helping American workers and businesses, as they claim to be. If, in fact, that’s the aim of this legislation, then we should have a full and fair debate on it, including an open amendment process that will allow the Senate to explore alternative approaches and to discuss different ideas on how best to create jobs in this country,” said Hatch.
Below is the text of Hatch’s full speech delivered on the Senate floor today:
Mr. President, soon we will begin debate on the so-called Bring Jobs Home Act.
Now, there are a number of serious problems facing our country.
For example, our national debt currently exceeds $17.5 trillion. That’s trillion, with a “T.”
Our economy continues to struggle. In fact, the economy actually shrank in the last quarter.
We have an entitlement crisis that threatens to swallow up our government and take the economy down with it.
And, of course, as has been widely discussed, we’re seeing a parade of U.S. multinationals opting to move their legal domiciles to countries outside the U.S.
During these difficult times, what are we hearing from my friends on the other side of the aisle?
We’re hearing talk about “economic patriotism.”
I didn’t make that term up, Mr. President. It’s the latest catchphrase coming from the Obama Administration as they try to malign business models and investments that they don’t like during an election year.
Just last week, I received a letter from the Treasury Secretary calling for “a new sense of economic patriotism” as the administration pushed for legislation that would punitively and retroactively seek to limit corporate inversions.
The President has repeated the line in some of his recent speeches.
Of course, “economic patriotism” is not a new catchphrase. It was trotted out by the President during the 2012 election campaign.
And, now, it appears to be making a comeback. Not surprisingly, this comeback is taking place in the midst of another election year.
Apparently, as part of this recycled campaign theme, we’re going to have to once again debate and vote on the Bring Jobs Home Act, the same bill the Senate rejected during the last election cycle.
If enacted, this legislation would deny the deduction for ordinary and necessary business expenses to the extent that such expenses were incurred for offshore outsourcing.
That is, to the extent an employer incurred costs in relocating a business unit from somewhere inside the United States to somewhere outside the United States, the employer would be disallowed a deduction for any of the associated business expenses.
The bill would also create a new tax credit for insourcing.
That is, if a company relocated a business unit from outside the United States to inside the United States, the business would be allowed a tax credit equal to 20 percent of the costs associated with that relocation.
Like I said, Mr. President, this is a recycled bill. The political talking points surrounding the bill are also recycled.
This bill and the related talking points are based on the oft-repeated lie that there are special incentives or loopholes in the tax code that encourage businesses to move jobs overseas.
No such loopholes exist.
As the Joint Committee on Taxation noted in its recent analysis of this bill:
“Under present law, there are no targeted tax credits or disallowances of deductions related to relocating business units inside or outside the United States. Deductions generally are allowed for all ordinary and necessary expenses paid or incurred by the taxpayer during the taxable year in carrying on any trade or business. These ordinary and necessary expenses may include expenditures for the relocation of a business unit.”
The truth couldn’t be plainer, Mr. President. Yet, the supporters of this bill still talk as though this legislation will end some kind of special tax treatment or deduction for companies that outsource. There is no such special treatment. Under our tax code, relocation expenses are treated the same whether a company is relocating from a high tax state in the U.S. to a lower tax state, or if a company relocates some operations offshore.
As the non-partisan Congressional scorekeeper has made clear, there are no targeted tax benefits related to relocating business units outside of the U.S.
Now, as JCT said, there has always been a deduction allowed for a business’s ordinary and necessary expenses — and expenses associated with moving have always been regarded as deductible business expenses. That being the case, allowing a deduction for these expenses is not all that remarkable. It is the general rule.
Disallowing or putting exceptions on this deduction, on the other hand, would be an extraordinary deviation from long-standing tax policy and would needlessly add yet another level of complexity to our already overly complex tax code.
Still, let’s pretend, for a moment, that this deviation is, in terms of tax policy, justified. It’s not, but there’s no harm in pretending.
Even if it were justified in terms of policy, the revenue generated by this proposal is miniscule.
According to JCT, preventing businesses from deducting expenses relating to outsourcing would raise about $140 million over ten years.
That’s about $14 MILLION a year. Not $14 BILLION.
Mr. President, to put the puny amount of this proposal in context, we should compare this revenue number against the volume of business U.S. companies conduct overseas.
According to the latest available IRS Statistics of Income, in 2010, U.S. companies conducted about $1.085 trillion in business abroad, and that’s probably low given the sluggishness of the economy at that time.
On an annualized basis, the Bring Jobs Home Act would curtail deductions representing about $40 million in expenses.
That represents about four thousandths of one percent of all overseas business conducted by American companies. Let me repeat that: four thousandths of one percent; hardly perceptible.
Like I said, Mr. President, we’re talking about miniscule sums here.
Yet, over the last few years, we’ve heard countless claims from my friends on the other side of the aisle that “closing loopholes for businesses that move jobs overseas” will pay for all kinds of things.
Earlier this month, for example, President Obama claimed that part of his infrastructure plan could be paid for by making sure that corporations shipping jobs overseas “pay their fair share of taxes.”
Well, if this bill is representative of this particular effort, the President doesn’t plan on paying for very much. I’d bet that $14 million wouldn’t even be enough to pay for a single high-speed rail car or a round of IRS bonuses.
Of course, all of this discussion only focuses on one section of the bill. When you add in the other part of the bill – the 20 percent credit for expenses associated with insourcing – the Bring Jobs Home Act actually loses revenue, adding $214 million to the deficit over ten years.
So, why are we debating this bill, Mr. President?
It’s obviously not about raising revenue to pay for anything.
It’s clearly not about impacting businesses’ economic decision making.
And, it’s not about improving or simplifying our tax code.
Instead, Mr. President, this bill is about politics, pure and simple. It was all about politics the last time we debated this bill in 2012, and it’s about politics this time around.
The Democrats – both in the Senate and the White House – think they gain some traction by talking about “economic patriotism” and trying to paint Republicans as the party of outsourcing.
This bill is yet another election-year gimmick, pure and simple.
And, quite frankly, the American people are tired of gimmicks. What they want are serious solutions to the problems ailing our country. Sadly, they’re not getting that from the Senate Majority Leadership these days.
If we’re serious about bringing jobs home, we should try working on legislation that will actually make the United States a better place to do business.
We should try working on legislation that will actually grow our economy.
But, we don’t do much of that in the Senate these days. Instead, what we’re seeing is an endless series of show votes designed to highlight whatever Democratic campaign theme is popular that week.
We’ve seen votes designed to highlight the supposed “War on Women.”
We’ve seen votes designed to make it appear that Republicans are indifferent to plight of the middle class.
And, now we’re seeing votes designed to demonize Republicans for their supposed lack of “economic patriotism.”
When does it end, Mr. President? From the looks of things, not any time soon.
Now, I suspect that, as we debate the so-called Bring Jobs Home Act, that Republicans will offer a number of amendments that, unlike this bill, will actually create jobs here in the U.S. I plan to offer some amendments along those lines and I’m sure many of my colleagues will do the same.
This will be an opportunity to show whether the Senate Democratic Leadership is serious about creating jobs and helping American workers and businesses, as they claim to be. If, in fact, that’s the aim of this legislation, then we should have a full and fair debate on it, including an open amendment process that will allow the Senate to explore alternative approaches and to discuss different ideas on how best to create jobs in this country.
Let’s talk about actually fixing our tax code.
Let’s talk about growing our economy.
Let’s talk about real solutions to the real problems facing our nation.
I hope that’s the kind of conversation we’ll have on this bill. Of course, I’m not naïve. I know how the Senate operates these days. I’ve come to the floor numerous times – just yesterday, in fact – to lament the deterioration of this body under the current leadership. I’m not under any illusions that things are simply going to change overnight.
But, Mr. President, make no mistake, things need to change. For the good of our country, things need to be done differently around here.
Like I said, the American people are tired of the political gimmicks. They’re tired of the endless campaign. They want to see the Senate act in a way that will produce results.
Sadly, with this legislation before us this week, it looks like we’re in for yet another round of partisan gamesmanship.
We can do things differently. And, once again, I hope we will. But, as I’ve said many times before, I won’t hold my breath.
I yield the floor.