President Obama issued his “to do” list to Congress on Tuesday. Hopefully, America’s Senators and Representatives can pull themselves away from their busy summers of tweeting pictures of their genitalia and (allegedly) soliciting gay sex in airport bathrooms long enough to address the President’s concerns.
So what’s on the agenda? Nothing we haven’t seen before. More international reform that will never get passed, the extension of 100% bonus depreciation, which should be a foregone conclusion depending on what bill it’s attached to, and additional clean energy incentives. Here is the complete list, with links added to previous Double Taxation coverage on each recommendation:
1. Reward American Jobs, Eliminate Tax Incentives To Ship Jobs Overseas: Congress needs to attract and keep good jobs in the United States by passing legislation that gives companies a new 20 percent tax credit for the cost of moving their operations back to the U.S. and pay for it by eliminating tax incentives that allow companies to deduct the costs of moving their business abroad.
Currently, if a firm shutters a production facility, moves it to another country, and incurs $15 million in expenses for breaking down assembly lines and production equipment, moving expenses to transport equipment abroad, and mothballing the Iowa facility, then under current law, the company could reduce its tax burden by $5.25 million dollars, assuming a 35 percent corporate tax rate. Under the President’s plan, this company can no longer deduct the $15 million in moving expenses, eliminating the $5.25 million tax break for shipping the facility overseas.
Consider the same firm as above, except they are moving the facility from overseas back to the U.S. If this company were to move a manufacturing plant with 800 employees back to the United States from another country, and incurred $15 million in costs from packaging and transporting equipment, and cleaning up the old facility abroad, then under the President’s plan, the company would still be able to deduct the $15 million, saving $5.25 million in taxes and on top of that would receive a 20% credit on its $15 million in expenses – or a $3 million additional income tax benefit. [Ed note: it's hard to imagine Congress would truly permit the same costs to be both deductible and creditable, as that sort of double benefit is rarely seen in the Code.]
2. Cut Red Tape So Responsible Homeowners Can Refinance: Congress needs to pass legislation to cut red tape in the mortgage market so that responsible families who have been paying their mortgages on time can feel secure in their home by refinancing at today’s lower rates.
3. Invest in a New Hire Tax Credit For Small Businesses: Congress needs to invest in small businesses and jumpstart new hiring by passing legislation that gives a 10 percent income tax credit for firms that create new jobs or increase wages in 2012 and that extends 100 percent expensing in 2012 for all businesses.
4. Create Jobs By Investing In Affordable Clean Energy: Congress needs to help put America in control of its energy future by passing legislation that will extend the Production Tax Credit to support American jobs and manufacturing alongside an expansion of the 30 percent tax credit to investments in clean energy manufacturing (48C Advanced Energy Manufacturing Tax Credit)
5. Put Returning Veterans to Work Using Skills Developed in the Military: Congress needs to honor our commitment to returning veterans by passing legislation that creates a Veterans Job Corps to help Afghanistan and Iraq veterans get jobs as cops, firefighters, and serving their communities.