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Senate debates tax increases on companies that move jobs overseas

By Shailagh Murray
Washington Post Staff Writer
Friday, September 24, 2010; 6:18 PM

The Senate will have a tax cut debate next week after all.

But instead of extending President Bush's individual income tax cuts, the legislation senators will consider would impose tax increases on corporations that shift operations overseas, costing U.S. jobs.

Senate Majority Leader Harry Reid (Nev.) sought to bring the bill to the floor Friday morning but was blocked by Senate Minority Leader Mitch McConnell (Ky.), setting the stage for Monday afternoon floor speeches and a Tuesday showdown when Democrats try to override GOP opposition.

Democrats view the outsourcing issue as a big winner with voters because it speaks to the heavy manufacturing job losses that have devastated communities in Midwest and East Coast industrial states.

"There is no issue more important to the American people than the outsourcing of jobs, and that's why we're focusing on it," said Sen. Charles Schumer (D-N.Y.), a member of Senate Democratic leadership. He is among the senators running for re-election on Nov. 2.

One hard-hit state is the 2010 election battleground of Ohio. For instance, Montgomery County, home to Dayton, has seen its manufacturing jobs base shrink to 24,000 jobs from 57,000 jobs in the past 10 years. "This legislation is going to help stop the hemorrhaging," said Sen. Sherrod Brown (D-Ohio).

Sen. Richard Durbin (D-Ill.), also a leadership member, said Democrats decided Monday to stall action on the Bush tax cuts because the current rates remain in place until the end of the year. "We feel there is a greater sense of urgency" in passing the offshore provisions, Durbin said.

Democrats now plan to address the Bush cuts during the lame-duck session after the election. The party is divided over whether to extend all the existing rates, or only those on household income below $250,000 per year.

The Democratic corporate tax bill includes three provisions. One would end tax deductions that companies may take for expenses incurred when they shutter a U.S. operation and shift the work abroad. The second would impose an income tax on products once made in the U.S. but now manufactured by foreign workers. The third measure would provide a payroll tax incentive for companies to create American jobs by shifting overseas operations back to the U.S.

Democrats said the bill's estimated price tag is $720 million over 10 years.

Business groups are strongly opposed to the Democratic proposal, as McConnell noted on the Senate floor Friday morning when he raised a procedural objection to Reid's maneuver, forcing a Tuesday vote.

"The majority has wasted months in this chamber trying to tell the private sector what to do instead of providing certainty to help them make investment decisions," said McConnell. Many U.S. companies, he said, open operations abroad not to dodge U.S. taxes and workplace laws, but to compete in foreign markets.

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