Senate Minority Leader Chuck Schumer Calls for New “Outsourcing Tax”

Politics and money

Senate Minority Leader Chuck Schumer of New York, along with Senator Debbie Stabenow of Michigan and Senator Joe Donnelly of Indiana, announced plans for severe new punishments on U.S. companies that outsource jobs. According to Schumer, the new measures are tougher than Section 301 (1974 Trade Act), which the Trump administration is ready to resurrect.

In a move that President Donald Trump might actually agree with, the program would establish a job security council. The program would review intended purchases of American companies by foreign corporations. The panel would have the power to block a deal if it hurts American workers or the U.S. economy.

The move by the Democrats is seen as an effort to appeal to blue-collar American workers, a segment of voters that helped usher Trump into the White House.

“This plan would level the playing field for American workers by ensuring our workers aren’t competing in a race to the bottom on wages and labor protections,” strategy documents state.


The proposals by the Democrats include penalizing businesses that move their headquarters out of the U.S. to pay less corporate tax. Companies would have to pay a corporate tax rate of 35% on any profits held overseas before relocating. As it stands right now, businesses can defer those taxes until the money is brought back into the U.S.

The proposal also looks to close creative loopholes. Companies would also be prevented from deducting the expense of moving those jobs. At the same time, businesses that bring jobs back to the U.S. would receive a tax credit for 20% of those costs.

The rules are even tougher for government contractors, including a public “shame list” for those that consistently send U.S. jobs overseas. Moreover, the Democratic proposal would require U.S. companies that outsource to tack on as much as 10% to their estimated costs, making them less competitive.

The Democratic proposal also seeks to weed out currency manipulation—a thinly veiled attack on China. Democrats are looking for a new law that would allow the federal government to impose duties on countries that undervalue their currency, a move that makes it more attractive to American businesses.

Under the current system, the Treasury Department is the only entity that can designate a nation as a currency manipulator.

Some of the new Democratic proposals will also appeal to those who voted for Trump in November. In particular, to renegotiate NAFTA and enforcing rules that require the federal government to purchase American-made goods.

This new move by the Democrats is seen as the second phase of their new platform, named “A Better Deal.” The Democrats began rolling out their plans for the agenda last week, promising to examine corporate mergers with greater detail and lower prescription drug prices. “A Better Deal” is also expected to look at the cost of infrastructure and higher education.


In rare bipartisan display, Democrats back Trump on China trade probe,” Reuters, August 3, 2017.

Democrats Call for New ‘outsourcing tax,” CNBC, August 2, 2017.