Here is the overall description of the bill:
The legislation would have raised taxes on corporations that shift operations overseas, costing U.S. jobs. It also would have awarded companies that bring jobs back from abroad by offering a two-year hiatus from payroll taxes for those positions.
The tax bill under consideration Tuesday included three parts: an end to tax deductions for expenses incurred when companies shutter a U.S. operation and shift the work abroad, a new tax on products once made in the United States but now manufactured by foreign workers and the payroll tax holiday.
Here's another, more detailed description:
The legislation has three parts. First, a two-year break on payroll taxes for every new employee that businesses can certify is "replacing an employee who had been performing similar duties overseas." (Quotations are from a summary the Democrats are circulating.) In other words, a business would get a tax break if it could show that a new hire in Georgia was replacing someone they fired in India.
Currently, businesses can defer the taxes on income earned abroad until they bring that money back home to shareholders. That means they can invest it for awhile and earn interest before paying taxes on it. That gives firms a reason to move their income -- and at least some of their operations -- to low-tax countries. It's why the Netherlands, Bermuda and Luxembourg receive so much income from multinational corporations, despite having very little in the way of economic activity from those corporations.
The bill ends deferral "for companies that reduce or close a trade or business in the U.S. and start or expand a similar business overseas for the purpose of importing their products for sale in the United States."
Then there's another policy to keep corporations from taking a tax deduction or credit when they close a domestic plant in order to open a similar plant elsewhere. Once again, it is hard to imagine that the money we'll spend on enforcement will match the money the policy will generate.
http://voices.washingtonpost.com/ezra-klein/2010/09/the_senate_democrats_disappoin.htmlOverall, Klein is critical of the bill, saying that it's scale is too small to make enough of a difference.
