Bill aims to close tax loopholes that cost U.S. taxpayers $23 billion a year.
View full sizeOn Wednesday, Rep. Dan Maffei will unveil details of a bill he is proposing to close loopholes that allow companies to move jobs overseas. It would also provide tax breaks to companies that remain in the United States.Washington, D.C. -- U.S. Rep. Dan Maffei, aiming to stop corporations from taking Upstate New York jobs to cheaper overseas plants, says he has come up with a bill that could reverse the trend.
Maffei on Wednesday will unveil details of legislation that would close tax loopholes for companies doing business overseas, and at the same time significantly lower the corporate tax rate for American businesses.
If successful, Maffei’s bill would close corporate tax loopholes that cost American taxpayers an estimated $23 billion per year. The money saved from closing the loopholes would be used to lower the corporate tax rate by about one-third from 35 percent to 23 percent.
“The companies who have been good corporate citizens and kept their factories in the United States — they will be the big beneficiaries of this,” Maffei, D-DeWitt, said in an interview Tuesday.
He said Upstate New York companies such as Welch Allyn, of Skaneateles, and Corning Inc., which resisted the idea of moving manufacturing overseas, would be rewarded. “It would be a huge incentive to keep companies here,” Maffei said. “No longer would there be an incentive to invest profits overseas. And it would even make sense for foreign companies to open more factories here.”
Those companies that have taken jobs overseas, such as Carrier Corp., would have new incentives to return, with lower taxes and the elimination of the loopholes. “If we were to enact this tomorrow, I’m not saying every job from China would come back,” Maffei said. “But at least we would stop companies from leaving.”
The freshman Democrat plans to unveil details of his plan at a press conference Wednesday morning outside the closed Syracuse China plant in Salina. Libbey Inc., the owner of Syracuse China, closed the plant last year and moved production to China, eliminating 275 jobs.
Maffei said his legislation, proposed last week in the House of Representatives, would discourage corporations from making such moves by:
• Eliminating a corporate tax loophole that allows American firms to keep income in overseas accounts, while deducting that foreign income from their U.S. taxes.
• Requiring multinational companies incorporated in tax havens such as Bermuda and the Cayman Islands to pay taxes on income earned through subsidiaries in the United States.
• Lowering the top corporate tax rate from 35 percent to 23 percent. Those companies in the 34 percent and 25 percent brackets also would see their tax rates lowered to 23 percent.
• Making permanent a small business expense deduction of $125,000 that is due to expire at the end of this year.
Maffei’s legislation was referred to the House Ways and Means Committee. No estimates have been made of the bill’s costs. “I would make the argument that the bill pays for itself,” Maffei said. “We believe it would be roughly revenue neutral in the long run.”
So far, Maffei has not asked for any co-sponsors of the bill. He simply wants to begin a conversation in Congress that he said is long overdue. “The chances of it going through this Congress are very small,” he said. “But the chances of it going through the next Congress are much better.”
He said the issue of losing American jobs to overseas operations is one that resonates beyond Upstate New York. He said it is an issue that President Barack Obama promised to address.
“The administration I think has been going much too slowly on this,” Maffei said. “Their heart is in the right place. But I don’t think they want to rock the boat. But this is the kind of change President Obama promised.”
Contact Mark Weiner at mweiner@syracuse.com or 571-970-3751.