Former Vice President Joe Biden proposed an offshoring tax penalty and a reshoring tax credit during a speech in Michigan on Sept. 9.
“We’re going to impose a tax penalty on companies that avoid paying U.S. taxes by offshoring jobs and manufacturing only to sell those good back to the American consumer,” Biden said.
“If your big corporate strategy is to boost your shareholders’ profits, your CEO’s bonuses by moving jobs out, well, we’re going to make sure you not only pay full U.S. taxes on those profits, but we’re going to guarantee, we’re going to add a 10 percent offshoring penalty surtax to your bill.”
Corporate taxes would go up across the board from 21 to 28 percent under Biden’s proposed tax plan. The 10 percent surtax is effectively a 2.8 percent tax penalty, which means the targeted companies would pay 30.8 percent on their offshoring profits.
Biden also proposed a 10 percent tax credit for companies that reshore jobs, revitalize U.S. facilities, or expand their U.S. manufacturing payrolls, among other criteria.
“If you are ready to make it in America, then just like there are consequences for offshoring, there will be rewards and incentives for creating good-paying jobs here at home,” Biden said.
Under the proposed plan, American companies would no longer be able to write off expenses associated with moving jobs or production overseas.
President Donald Trump’s reelection campaign didn’t respond to a request for comment. The president and his campaign spokespeople have repeatedly denounced Biden’s plan for tax increases.
“Joe Biden’s plans to raise taxes by $4 trillion and implement his version of the Green New Deal would destroy the economy just as American workers and businesses begin their recovery,” the campaign said in a Sept. 9 statement.
The campaign’s $4 trillion figure is an apparent reference to the Tax Foundation’s estimate that suggests that Biden’s tax plan would raise $3.8 trillion in tax revenue over the course of a decade.
Trump campaigned in 2016 on a promise to bring back American jobs. The Tax Cuts and Jobs Act passed in 2017 went a long way toward delivering on that promise by slashing the corporate tax rate from 35 to 21 percent.
Biden’s campaign claims the Tax Cuts and Jobs Act includes three loopholes, which the former vice president’s proposal would remedy.
In an additional proposal, Biden said he would take several executive actions during his first week in office, if elected, to make sure the federal government buys U.S. products. Trump has taken a number of steps to achieve the same goal, which Biden claims have been insufficient.
The Democratic presidential nominee said the U.S. government spends $600 billion annually on federal contracts, money which should go to U.S. companies, but is often sent overseas.
A fact sheet from the Biden campaign listed six executive actions aimed to solve the problem, the core of which appears to be a plan to invoke the Defense Production Act and the Federal Property and Administrative Services Act of 1949 Act to compel the federal government to abide by existing buy-American rules. One of the other proposals would create a “Made in America” Office within the White House Office of Management and Budget.
The plan is part of a broader Biden strategy to hone in on economic matters, which have tended to be President Donald Trump’s strong suit. While Trump’s approval on the economy fell as the outbreak of the Chinese Communist Party (CCP) virus drove lockdowns and historic job losses, the downward trend bottomed in early August and the president’s approval on the economy has since been on the rise.
Trump, along with economic experts in his administration like Larry Kudlow, have repeatedly touted the dynamics of the post-outbreak economic rebound across a number of measures, including retail sales, factory numbers, and the stock market. While there are still around 10 million fewer jobs in the economy than before the outbreak, the rebound has, on the whole, been sharp. Recent Labor Department figures show that the U.S. economy added 10.5 million jobs since May. Two of the three major Wall Street stock indexes have recovered all their pandemic losses and are now trading close to their all-time highs.
Biden has attacked Trump on the economy, claiming the president has focused on corporate welfare and tax cuts for the wealthy instead of helping ordinary Americans.
Trump won Michigan by 0.3 percent of the vote in 2016 against Hillary Clinton. The state is a toss-up again this year with Biden leading by 3.2 percent in an average of polls maintained by Real Clear Politics.
Tom Ozimek contributed to this report.