An anti-outsourcing bill proposed by Senate Democrats and informally known as the Creating American Jobs and End Offshoring Act (SB 3816) was defeated on a vote of 53-45. The bill would have (i) provided tax incentives to business entities that move jobs to the United States, (ii) eliminated tax deductions for expenses incurred by companies when moving work overseas, (iii) imposed taxes on products manufactured abroad that were once made in the United States, and (iv) prohibited U.S. companies from deferring taxes on the income of their foreign subsidiaries. Senate Republicans with the help of four Democrats and Connecticut Independent Joe Lieberman successfully defeated the proposed legislation arguing that the proposed tax would negatively impact US businesses competing in foreign markets. The US Chamber of Commerce also aggressively lobbied against the bill, arguing that “[r]eplacing a job that is based in another country with a domestic job does not stimulate economic growth or enhance the competitiveness of American worldwide companies.”
In response to similar anti-offshoring legislation that increased H-1B application fees for certain companies, an editorial published by Computer World makes an argument that legislation aimed at limiting offshoring is often ineffective. The editorial cites five reasons for such ineffectiveness, including the ability of offshore firms to manage the consequences of these new laws, the continued success of large offshore firms and the federal government’s work on trade agreements such as the totalization agreement currently being negotiated between the US and India that would exempt Indian firms from having to pay certain taxes on temporary visa workers.