This vote was on whether to begin debating a bill intended to provide tax incentives to encourage companies to replace overseas workers with those based in the United States. Specifically the bill would reduce for two years the share of Social Security payroll taxes U.S. companies must pay, if they hire new U.S.-based workers to replace those that had previously been working outside the United States. The bill would pay for this by repealing tax breaks for companies that move their U.S. plants overseas.
Typically bills are brought to the floor through a procedural motion called a “motion to proceed,” which is usually approved by voice vote as a routine matter. However, if a senator wants to hold up consideration, all he has to do is remove his consent – which was the case with this bill. Instead, the Democratic leadership called a vote on beginning debate on the bill, which is what this vote was on.
Patrick Leahy, D-Vt., said the bill will help curb the decades-long trend of companies outsourcing American jobs abroad.
“The devastating effects of global offshoring have hit large, manufacturing States like Ohio, Michigan, Indiana, and California with particular hurt, but smaller States like Vermont are not immune to the global realities of corporate outsourcing and consolidation. Unfortunately, there is quite a list of companies in recent years that have either left our State or gone out of business entirely because they moved jobs overseas or were squeezed out of the market by competitors using cheap, foreign labor,” Leahy said.
Republicans supported reducing payroll taxes to encourage companies to hire more Americans, but did not like the way the bill paid for that foregone revenue.
Charles Grassley, R-Iowa, said one of the tax breaks that would be repealed to pay for the bill involves getting rid of companies’ ability to defer taxes on income owned overseas, which could actually drive some jobs overseas.
“In general, deferral is not allowed if the income is earned offshore and the reason for it being offshore is solely to avoid tax. What is bad about the bill is it would deny deferral for income that a foreign subsidiary legitimately earns from the sale of goods into the U.S. market,” Grassley said. “There could be many reasons [for their location decisions] having nothing to do with tax policy. But the sponsors of this bill don’t seem to understand that fact, that American manufacturing ought to be competitive with overseas competition or, obviously, we are going to lose business and lose jobs in the process or perhaps the bill’s sponsors would admit that curbing tax avoidance is not the point. Perhaps they would instead claim it is all about an effort to create American jobs. That would be a very good goal, but it is unlikely to create jobs. I fear it would have the opposite effect. The bill may lead to fewer headquarters jobs in the United States, if a corporation, for uncompetitive reasons, decided to move totally offshore and take those headquarters jobs with them.”
By a vote of 53-45, the motion to begin debating the bill failed. Though more voted yes than no, this particular type of vote required 60 in order to be considered passed. All but four Democrats present voted to begin debating the bill. Every Republican voted against beginning debate on the bill. The end result is that Democrats in the Senate could not gather enough support to move forward a bill intended to help curb outsourcing U.S. jobs by providing companies tax incentives related to Social Security payroll taxes.