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Bill uses tax code to keep jobs in U.S.

Nancy Marshall-Genzer Sep 24, 2010
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Bill uses tax code to keep jobs in U.S.

Nancy Marshall-Genzer Sep 24, 2010
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TEXT OF STORY

BILL RADKE: Congress is looking at using the tax code to keep companies from moving factories, and jobs, overseas.

Marketplace’s Nancy Marshall Genzer reports Democrats hope that idea appeals to voters concerned about unemployment.


NANCY MARSHALL GENZER: The bill takes a carrot-and-stick approach. The carrot? Giving companies a two-year break from Social Security taxes for every U.S. employee they hire to replace a foreign worker. The stick? Firms could no longer deduct the cost of relocating abroad. And companies couldn’t put off paying taxes on foreign income.

Would all that be enough to keep U.S. factories open? Economist Gus Faucher at Moody’s Analytics is skeptical. He says foreign employees make up to 90 percent less than U.S. workers.

GUS FAUCHER: Those cost differentials are so large that any changes that they make through the tax code are going to be pretty minimal. And they really aren’t going to be enough to sway business decisions.

And some big U.S. companies have moved their headquarters abroad, so they’re not even subject to U.S. tax law.

Catherine Mann is an economist at Brandeis University.

CATHERINE MANN: Accenture, for example, is headquartered in Bermuda, and Halliburton, of course, in Dubai.

Mann says they’re far from the reach of any tax legislation Congress can cook up.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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