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WYDEN LEGISLATION WILL TARGET
OFFSHORE OUTSOURCING
Bill would eliminate tax breaks for companies
that ship American jobs overseas, provide legal protection to
companies loyal to American employees
June 16, 2004
Washington, DC – Companies
that outsource American jobs would lose tax benefits, and outsourced
service sector and technology employees would for the first time
see training and income relief, under legislation introduced today
by U.S. Senator Ron Wyden (D-Ore.). The “Keep American Jobs
at Home Act” would eliminate tax deductions for businesses
that ship American jobs overseas, provide wage insurance and training
assistance for service sector workers whose jobs have been shipped
overseas, and offer legal protections for companies who refuse
to outsource their workforce to maximize profits.
“These are some logical
steps Congress can take to keep jobs from leaving the U.S. that
won’t damage our long-term economic outlook or our relationships
with other nations,” said Wyden. “Republicans and
Democrats ought to be able to agree that taxpayers shouldn’t
subsidize the exporting of American jobs, companies shouldn’t
get forced into exporting those jobs out of fear of lawsuits,
and workers who lose their jobs as a result of outsourcing shouldn’t
be denied worker training.”
A summary of the legislation
follows.
ELIMINATE TAX BREAKS
FOR CORPORATE OUTSOURCING
Eliminates several tax deductions
for companies that outsource American jobs, including those for
executive compensation and for the cost of training overseas workers
related to outsourcing. Companies could also no longer defer taxes
on profits gained from shipping jobs overseas. Today, the service
sector accounts for more than 80 percent of total U.S. employment;
as many as 500,000 of these positions have been outsourced in
the past three years.
TRAINING, RETRAINING
AND JOB SEARCH ASSISTANCE
Provides outsourced service sector workers with the same training
assistance offered to manufacturing workers through the Trade
Adjustment Assistance (TAA) program. Currently, Americans who
have seen their service jobs in call centers, technical support,
software development and other service sector industries shipped
abroad are not eligible for the training, retraining and job search
help offered to manufacturing workers under TAA. Displaced workers
who qualify for TAA are also eligible for a tax credit to cover
75 percent of the cost of their health insurance premium.
WAGE INSURANCE FOR RE-EMPLOYED
DISPLACED WORKERS
Offers wage assistance to outsourced service sector workers. These
workers would receive as much as 50 percent of the difference
between the salary paid at their outsourced job and a lower salary
paid at a new job, up to a maximum of $10,000 for one year. The
eligibility age for this assistance would be 40 years of age.=
A McKinsey Global Research study
found that only one-third of workers who lost their jobs between
1993 and 1999 found new jobs at equal or higher salaries. The
remaining two-thirds matched their earlier salary, at best, or
accepted a pay cut. The same study reported that for four to five
percent of the savings companies get from outsourcing, they could
provide wage insurance for every full-time worker whose job is
shipped overseas.
CORPORATE IMMUNITY FOR
REFUSING TO OUTSOURCE JOBS
Provides corporate immunity
from stockholder lawsuits alleging financial losses due to a corporation’s
refusal to outsource work from the U.S. Some company officials
have claimed that failing to save money and increase profits through
outsourcing would open them to stockholder lawsuits.
The Wyden bill is expected to
be referred to the Senate Finance Committee.
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