"Senate Republicans Advance Key Part Of Obama’s Budget, Two Years Later"
More than two years after President Obama called on Congress to curb corporate offshoring, the Bring Jobs Home Act will finally get a debate in Congress after the Senate voted 93-7 to advance the bill on Wednesday.
If the bill were to become law, corporations would lose the ability to deduct the cost of moving overseas from their taxes and gain an equivalent write-off for the cost of re-shoring jobs from abroad to America. President Obama first called on Congress to pass such legislation in early 2012.
Republicans blocked debate on the measure that year, saying that such piecemeal changes to tax rules should not come before wholesale corporate tax reform. The fact that all but seven GOP senators voted for cloture on the measure Wednesday is therefore something of a reversal.
But that shift in posture is unlikely to produce any actual progress. Wednesday’s vote only allows the Senate to formally debate the Bring Jobs Home Act, but it does not require the chamber to hold a vote on the actual passage of the legislation. The measure will need to receive another 60-vote majority at the end of the debate period in order to move to a vote on actually passing the measure by simple majority. Republicans will not necessarily allow that to happen, and even if they do the measure is likely dead on arrival in Speaker John Boehner’s (R-OH) House of Representatives.
“It’s a bill that’s designed for campaign rhetoric and failure, not to create jobs here in the U.S.,” Senate Minority Leader Mitch McConnell (R-KY) said prior to Wednesday’s vote, confirming that the party’s position on the bill itself has not changed. “Everyone knows that the Democrats aren’t being serious here,” he added.
If they are not going to allow tangible progress on reshoring American jobs, then, why would Senate Republicans reverse their longstanding opposition to debating the bill on the floor? One answer is that McConnell and 14 of his members are up for reelection this fall. Another is that corporate offshoring has gotten more and more attention throughout the first half of 2014 as company after company has used mergers to shift their headquarters overseas and lower their tax liability.
The list of brands that have made headlines for attempting such a move this year alone includes Pfizer, Walgreen’s, Chiquita, Medtronic, and the drug-maker AbbVie. The maneuver, known as an “inversion” in corporate accounting jargon, has grown increasingly popular in recent years. The vast majority of the 76 total inversions attempted in the 30 years since the move was pioneered have taken place in the past six years. Such tax-evading mergers are entirely legal thanks to loopholes in the corporate tax code. The Bring Jobs Home Act wouldn’t ban inversions, but it would give companies financial incentive to move back to the U.S. rather than skip town.
The White House has gone so far as to call for “a new sense of economic patriotism” from corporate executives, and the Senate has held multiple hearings about the various ways that American companies avoid tax liabilities at home by shifting profits overseas. Republicans have continued to insist on wholesale corporate tax reform that would reduce tax rates, but recently lost a key ally in Democratic Sen. Ron Wyden (OR), who recently said he now supports smaller legislation to combat inversions.
Given the sheer size of the problem, it’s not hard to see why the idea of trimming tax subsidies that encourage offshoring prior to taking on the thornier subject of comprehensive reform is gaining ground. The total profits held offshore by U.S. companies are now valued at about $2 trillion. The Treasury loses tens of billions of dollars per year in revenues — enough to fund universal preschool education in perpetuity — to offshore tax evasion by businesses. As Fortune Magazine’s senior editor-at-large Allan Sloane put it at a Senate hearing Tuesday, “Inversions are a symptom of the underlying disease, which is the tax code. But as my daughter the ER doctor would tell you if she were testifying, sometimes you have to address the immediate symptom before going on to the cure.”
“If you’re bleeding out,” Sloane said, “you need to put on a tourniquet, then deal with the wound.”