[Congressional Record Volume 141, Number 164 (Monday, October 23, 1995)]
[Senate]
[Page S15498]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN (for himself, Mr. Daschle, Mr. Conrad, Mr. Levin, 
        Mr. Reid, Mr. Wellstone, Mr. Simon, Mr. Feingold, Mr. Kennedy, 
        Mr. Leahy, Mr. Harkin, Mr. Byrd, Mr. Ford, Mr. Kerrey, Mr. 
        Bumpers, and Mr. Kerry):
  S. 1355. A bill to amend the Internal Revenue Code of 1986 to end 
deferral for U.S. shareholders on income of controlled foreign 
corporations attributable to property imported into the United States; 
to the Committee on Finance.


          the american jobs and manufacturing preservation act

  Mr. DORGAN. Mr. President, we will soon be making a number of tough 
choices on the Senate floor to reduce the Federal deficit. There is one 
choice, however, which should be easy for most of us: eliminating the 
costly and misguided tax subsidy which encourages American firms to 
move abroad and then compete, unfairly, with Main Street businesses in 
the U.S. market.
  That's why I rise today--with 15 of my Senate colleagues--to 
introduce the American Jobs and Manufacturing Preservation Act. It 
repeals a perverse Federal tax incentive which actually encourages many 
of the finest U.S. companies to shut down their manufacturing plants in 
the United States, move them--and the jobs they provide--abroad, and 
then supply the U.S. market from foreign tax havens.
  The often-overlooked loss of our manufacturing jobs is alarming. Yet 
the Federal Government actually rewards U.S. companies that move their 
jobs and capital to foreign tax havens.
  This special tax subsidy is called deferral. The way it works is 
quite simple. If a U.S. company moves an operation abroad, it can defer 
its taxes on the resulting profits until it sends those profits back to 
the United States in the form of dividends. Evidence shows that this 
special tax break costs U.S. taxpayers billions of dollars in lost 
revenues, and accelerates the movement of U.S. jobs overseas.
  According to the Bureau of Labor Statistics, about 3 million U.S. 
manufacturing jobs have been lost since 1979. One half of that job loss 
in manufacturing, 1.4 million, occurred between January 1989 and 
September 1993. During this time, the United States lost an average of 
26,000 manufacturing jobs per month. This is the equivalent to shutting 
down one Fortune 500 manufacturing firm per month, for 56 months. While 
there was a short period of job growth in manufacturing in late 1993 
and 1994, there are new and disturbing signs that employment in 
manufacturing is again declining.
  While the United States was losing manufacturing jobs, many foreign 
tax havens were seeing significant increases in jobs creation from U.S. 
owned subsidiaries. For example, while the United States was losing 3 
million manufacturing jobs, the number of jobs with United States based 
companies in Singapore sky-rocketed by 46 percent, or 36,800 jobs. In 
1992, U.S. firms had hundreds of thousands of manufacturing jobs 
located in tax haven countries.
  The Federal Government has just started to track data to tell us how 
many of the U.S. jobs lost through plant closure moved overseas. 
However, if only half of the plant closings involved these runaway 
plants moving jobs to other countries, this would account for the 
elimination of more than half a million U.S. manufacturing jobs per 
year.
  This legislation is carefully targeted. It would end tax deferral 
only where U.S. multinationals produce abroad in foreign tax havens, 
and then ship those tax haven-produced products back into the United 
States. It is important to note that this bill does nothing to hinder 
U.S. multinationals that produce abroad from competing with foreign 
firms in foreign markets.
  We can hardly be shocked when U.S. companies move jobs overseas--jobs 
which produce goods for U.S. consumption, no less--when we offer a 
special tax break giving them an unfair advantage over U.S. competitors 
to do so. Add the low tax rates and labor costs which foreign 
governments often use to entice U.S. firms to move overseas and it's 
not surprising at all that many companies find the lure to move U.S. 
jobs to foreign countries irresistible.
  Congress should act now both to protect American jobs and to prevent 
any further erosion of our domestic economic base. And I intend to 
offer this legislation as amendment to the budget reconciliation bill 
later this week.
  Some companies may still choose to dislocate thousands of workers in 
America in search of greater profits abroad. But taxpayers should not 
be asked to provide billions of dollars in tax subsidies to encourage 
them to do so.
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