Congressional Democrats have introduced a bill to provide tax penalties to U.S. Companies that send jobs overseas. Republicans are fighting the bill prior to the end of the summer session.

Believe it or not, the United States used to be the dominant manufacturer in the world. The upper east coast and Midwest were mighty industrial areas employing millions of people in cities like Detroit, Cleveland, Baltimore and so on. This area is now called the “Rust Belt”, which tells you all that you really need to know about the state of things. 

Congressional Democrats are trying to even the playing field a bit. They have introduced a bill that will penalize U.S. companies that move overseas and encourage others to bring jobs back. The bill works by eliminating all tax deductions and credits for companies that close a facility and move the jobs to another country. An alternative approach being considered is to add an additional tariff to the products sold in the US by companies using offshore manufacturing. Either way, the idea is to eliminate the benefits of going abroad. 

What about a carrot? Surely, the legislature has considered that? Yes. They haven’t got far, however. The only idea at this time is to provide a payroll benefit to bringing jobs back to the continental United States. The question is how to do this and how to do it without being unfair to companies that remained when they could have gone abroad. 

As you might imagine, the Republican minority is fighting the bill. They argue that the reason companies move offshore with jobs is to be more competitive. The high labor costs in the United States make it difficult to compete with foreign companies that have much lower labor costs. 

So, who will win? Look for the Democrats to prevail on this one. Unemployment is high and foreign workers don’t vote. That makes this a tough argument to carry for Republicans.