U.S. Sens. Jeff Merkley (D-OR) and Sheldon Whitehouse (D-RI), along with U.S. Rep. Lloyd Doggett (D-TX), introduced bicameral legislation that would end tax breaks for companies that outsource jobs overseas.
The lawmakers said that the No Tax Breaks for Outsourcing Act would ensure that corporations do not receive tax benefits from outsourcing jobs and that they adhere to the Organization for Economic Cooperation and Development’s (OECD) global minimum tax agreement. The agreement, spearheaded by U.S. Treasury Secretary Janet Yellen along with 130 countries, would require American multinational companies to pay the same tax rate on profits earned abroad as they do in the United States.
“The road to economic security for working families must be paved with reliable, good-paying American jobs,” Merkley said. “That’s why it’s more important than ever that we close the gaping tax loopholes created by the Trump administration that allowed massive corporations to ship jobs and critical investments overseas. The time is now to pass the No Tax Breaks for Outsourcing Act, bring jobs back to our shores, and restore opportunities for American families in all of our communities.”
The lawmakers cited a study that said that the companies that benefited most from the offshore tax breaks for profits parked offshore invested more overseas following the law’s passage than they did in the United States. They also cited a study that estimated that closing offshore tax loopholes could save $77 billion in revenue annually.
The No Tax Breaks for Outsourcing Act would repeal offshoring incentives by:
- Equalizing the tax rate on profits earned abroad to the tax rate on profits earned in the United States;
- Eliminating the deductions for “global intangible low-tax income” (GILTI) and “foreign-derived intangible income” and applying GILTI on a per-country basis;
- Repealing the 10 percent tax exemption on profits earned from certain investments made overseas;
- Treating “foreign” corporations that are managed and controlled in the United States as domestic corporations;
- Cracking down on inversions by tightening the definition of expatriated entity;
- Combating earnings stripping by restricting the deduction for interest expense for multinational enterprises with excess domestic indebtedness; and
- Eliminating tax breaks for foreign oil and gas extraction income.
The bill is endorsed by the American Federation of Government Employees (AFGE); American Federation of Labor & Congress of Industrial Organizations (AFL-CIO); American Federation of State, County and Municipal Employees (AFSCME); American Federation of Teachers; Communication Workers of America (CWA); International Association of Machinists & Aerospace Workers (IAMAW); International Brotherhood of Teamsters; International Federation of Professional and Technical Engineers (IFPTE); International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW); IUE-CWA; National Education Association (NEA); Service Employees International Union (SEIU); United Steelworkers (USW); UNITE HERE; Union Veterans Council, AFL-CIO; and the AFL-CIO.