Business groups urge senators to oppose 'insourcing' bill

By Bernie Becker - 07/19/12 11:59 AM ET

A coalition of top business groups is lobbying senators to oppose a Democratic bill that would offer tax incentives to companies that bring jobs to the United States.

The PACE Coalition says the bill, scheduled for a procedural vote on Thursday, would have “unintended consequences,” and suggests that policymakers should instead concentrate more of their efforts on overhauling the U.S. tax code.

Under the measure, companies that relocate operations or jobs offshore would no longer be able to deduct those costs as a business expense.

Senate Democrats, whose proposal would also offer a 20 percent tax credit for the costs of bringing offshore jobs and operations back to the United States, have called that idea a no-brainer.

“There's not one Republican that should be voting against this,” Sen. Debbie Stabenow (D-Mich.), the bill’s sponsor, said on MSNBC this week. “They should be joining every Democrat in voting for this.”

But the PACE Coalition — which includes the Business Roundtable, the Information Technology Industry Council, the National Association of Manufacturers, the National Foreign Trade Council and the U.S. Chamber of Commerce — says there are legitimate business reasons for companies to shift operations, something it says the Senate bill doesn’t take into account.

“Relocation of certain business operations can result in greater production in the United States when it results in cost savings that can increase the international competitiveness of U.S.-made goods and services,” the groups wrote.

“In contrast, disallowing a deduction for a legitimate cost of doing business would inject even more uncertainty into business planning, add additional complexity to the tax code and further increase costs for U.S. companies, making them less competitive in the global marketplace.”

Senate Democrats and Republicans have been going back and forth in recent weeks over various tax proposals, as both sides seek to gain an advantage in an election year.

Majority Leader Harry Reid (D-Nev.), noting that the proposed GOP amendments for the tax bill included repealing the Democratic healthcare law, said Thursday that it was doubtful Republicans would be able to offer amendments.

For his part, Minority Leader Mitch McConnell (R-Ky.) said GOP senators would take that under advisement when casting their votes.

Democrats are preparing to vote on a one-year, $272 billion tax plan, likely next week, that would extend Bush-era tax rates on family incomes up to $250,000 a year.

GOP senators are pushing for a vote that would extend all current tax rates.