In an effort to make offshoring less attractive to businesses and to increase the number of jobs available in the United States, Rep. Bill Pascrell, Jr. (D-N.J.), a member of the House Ways and Means Committee, and Sen. Debbie Stabenow (D-Mich.), a member of the Senate Finance Committee, jointly introduced a bill on May 8, 2012, that would give a tax incentive to companies that move business activities and jobs back to the U.S. from foreign countries, while penalizing companies that move jobs and business functions overseas.
The Internal Revenue Code currently treats the cost of relocating equipment and personnel to a new location as a business expense that qualifies for a tax deduction. The Bring Jobs Home Act (H.R. 5542; S. 2884) would amend the Code by eliminating this tax deduction where such relocation is from the U.S. to an overseas location. The bill would also create a tax credit of 20 percent of “eligible insourcing expenses” incurred in connection with the elimination of a business unit located overseas and the relocation of that business unit and the associated jobs to the U.S. These expenses would include those already eligible as a deduction under the Code, as well as additional expenses specified in the bill. The proposed bill would also require that the expenses be related to a written plan for insourcing, and companies would not be entitled to a tax credit under the proposed bill unless the number of full-time equivalent employees performing work in the U.S.in the year for which they seek the expense credit exceeded the previous year’s number.
The bill would not be retroactive, and would only apply to costs paid or incurred following the its enactment.
The House bill is co-sponsored by 14 representatives, including House Ways and Means Committee ranking member Sandy Levin (D-Mich.). The Senate bill is co-sponsored by Sens. Sherrod Brown (D-Ohio) and Sheldon Whitehouse (D-R.I.). Pres. Barack Obama reportedly supports the bill.