[Congressional Record Volume 150, Number 66 (Wednesday, May 12, 2004)]
[Senate]
[Pages S5361-S5362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE JUMPSTART OUR BUSINESS STRENGTH (JOBS) ACT

  Mrs. FEINSTEIN. Mr. President, I rise in favor of the Jumpstart Our 
Business Strength (JOBS) Act.
  This is far from a perfect bill.
  But without this legislation, U.S. companies will face increasing 
tariffs as a result of a World Trade Organization ruling that 
determined that significant portions of our Federal tax code ran 
counter to international trade laws.
  Additionally, I voted for it because on balance it provides important 
tax relief for California businesses and labor protections for 
California workers.
  This bill will: effectively provide a 3 percent tax cut for 
manufacturers; give manufacturers a 50 percent tax credit for the cost 
of adding jobs; extend the research tax credit through 2005; protect 
hundreds of thousands of workers from cuts in Federal overtime 
protections; prevent the Federal Government from spending taxpayer 
dollars on contracts with companies that use foreign labor when there 
are domestic alternatives; provide a tax credit for companies which 
produce energy by using underbrush and other potentially hazardous 
fuels found in our forests; provide a tax credit for consumers who buy 
hybrid vehicles; and protect the California film industry and the jobs 
it creates.
  Since January 2001, California has lost 350,000 manufacturing sector 
jobs.
  A 3 percent tax cut for manufacturers, coupled with a 50 percent tax 
credit for the cost of adding new jobs, will help us create more jobs 
in California.
  The research tax credit will also help California, potentially more 
than any

[[Page S5362]]

other State. Productivity growth in recent years has been driven by the 
combination of new technology and investments in capital goods, 
research and development, workers, and public infrastructure.
  To continue this pattern of growth, the focus must now be on 
providing incentives to companies that invest, innovate, and create the 
new capital and knowledge that drive the U.S. economy.
  Since its enactment in 1981, the research tax credit has provided a 
powerful and effective incentive for firms to increase research 
spending.
  The tax credit lowers the cost of conducting research in the United 
States.
  This credit makes a real difference in the amount of research 
undertaken and jobs created in the U.S.
  I also support the Harkin amendment which was adopted as part of this 
legislation. This amendment will prevent the White House from 
implementing changes in existing overtime laws that reduce the number 
of workers protected by labor laws.
  Last year the White House proposed redefining the job descriptions of 
millions of workers, thereby eliminating their right to Federal 
overtime protection.
  After many in this chamber raised serious concerns over such a 
change, the administration released final rules that made a 
significant, yet insufficient, change to those draft rules.
  Unless we act, these rules will take effect later this year.
  If the Department of Labor's own numbers are correct, then more the 
117,000 individuals could lose overtime protection. If they are wrong, 
it could be millions.
  These rule changes would wipe out overtime pay protections and 
increase work hours. In California alone, several hundred thousand 
workers could lose their Federal overtime protection. However, State 
law will continue to protect most workers from the most harmful effects 
of this rule change.

  But, some public employees and many in the film industry won't be so 
lucky.
  Although most workers in California will maintain their right to 
overtime through protections granted by State law, the rule change 
represents a movement in the wrong direction when it comes to 
protecting working families.
  I also support provisions in the bill that will prevent the Federal 
Government from spending taxpayer money on contracts that use labor 
located outside of the United States.
  Although our Nation has entered a period of economic recovery with 
significant productivity gains in the last several quarters--it is 
clear that a great deal of this productivity comes from two things: 1. 
downsizing of employees, and 2. outsourcing--turning to foreign labor 
in foreign countries.
  In the past decade, General Electric sent 10,000 information services 
jobs to India; Electronic Data Systems exported 13,800 jobs to several 
nations; Microsoft spent $100 million on a new call center in the 
Philippines; and Citigroup and Bank of America both sent software 
development jobs to India.
  And while corporate earnings are up and the stock market remains 
high, we are continuing to lose service sector and manufacturing jobs.
  I realize that many firms benefit greatly from outsourcing, but it 
damages the long term health of our communities unless we vigorously 
support new job growth.
  We must give companies incentives to keep jobs here, and we must 
ensure that taxpayer money is not used to subsidize outsourcing.
  This legislation will also help protect our environment by providing 
tax credits that encourage companies to produce energy by using 
underbrush and other hazardous fuels from our forests.
  By providing an incentive to companies to remove these hazardous 
fuels from our forests, we will reduce the chance of forest fires in 
the western United States and provide much needed energy to this region 
of the Nation.
  Additionally, this bill contains tax credits directly to consumers 
who purchase hybrid vehicles. These vehicles reduce air pollution and 
cut ozone in California.
  Having said this, however, I recognize that there are significant 
problems with this bill.
  For instance, it is clear that multinational corporations are not 
paying their fair share of taxes.
  This bill allows companies to bring foreign-earned profits back into 
the United States at a greatly reduced tax rate--reduced from the 
current 35 percent to 5.25 percent. This is half as much as the lowest 
personal tax rate paid by individuals--10 percent.
  Under an amendment which I sponsored with Senator Breaux, companies 
would have been allowed to bring foreign-earned profits back to this 
country at the reduced 5.25 percent rate provided that they use those 
repatriated profits for activities that promote job growth or benefit 
employees.
  Sadly, a lobbying effort by large multinational companies helped to 
defeat that amendment.
  What is disturbing about this provision is that an unconscionable 
number of American companies are taking advantage of loopholes in U.S. 
tax law and paying no taxes.
  According to a recent Government Accounting Office report, entitled 
``Comparison of the Reported Tax Liabilities of Foreign and U.S. 
Controlled Corporations, 1996-2000'', 61 percent of U.S.-controlled 
corporations and 71 percent of foreign-owned corporations operating in 
the U.S. reported no tax liability during the period studied.
  This means that approximately two-thirds of all companies operating 
in the U.S. paid absolutely no corporate income taxes between 1996 and 
2000.
  This is stunning.
  Corporate tax receipts used to account for a much greater percentage 
of Federal revenues than they currently do.
  According to the Brookings Institution, in 1945, income taxes from 
corporations accounted for 35.4 percent of Federal receipts. In 1970, 
income taxes from corporations accounted for only 17 percent of Federal 
revenues.
  Today, however, corporate income taxes account for only 7.8 percent 
of Federal revenues.
  This means that corporations are paying a smaller percentage of taxes 
than they have in the past five decades.
  We have got to change the way we tax corporations in America. We have 
got to provide incentives to encourage corporate responsibility.
  Corporations have got to worry about more than just the bottom line. 
They have got to become good corporate citizens. Unfortunately, this 
bill does not do enough to encourage that kind of corporate 
responsibility.
  Going forward, I will seek to return balance to our tax system.
  The middle class is being squeezed, while multi-nationals continue to 
outsource jobs and receive tax breaks for doing it.
  Nevertheless, I will vote to protect California workers by helping to 
foster an environment where manufacturers can hire again. I will 
support research and development in our labs and factories. And, I will 
support protecting overtime protections for California citizens.
  This is by no means a perfect bill.
  But taken as a whole, I believe it is worthy of passage.

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