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Sanders To Introduce US 'Outsourcing Tax' Legislation

by Leroy Baker, Tax-News.com, Washington

01 December 2016


US Senator Bernie Sanders (I – Vermont) has stated his intention to introduce legislation into Congress that would impose an "outsourcing tax" on companies moving jobs out of the United States, as well as stripping them of their US tax breaks and benefits.

In a reaction to the plan by United Technologies (UTEC) and its subsidiary Carrier to move jobs to Mexico, Sanders stated that, if any company "wants to keep outsourcing decent-paying American jobs, those companies must pay an outsourcing tax equal to the amount of money it expects to save by moving factories to Mexico or other low-wage countries," or 35 percent of its profits, whichever is higher.

His proposed Outsourcing Prevention Act would also require all companies that outsource more than 50 jobs in a given year to pay back all federal tax breaks, grants, and loans they have received from the federal Government over the last decade. In addition, such companies would be prohibited through tax penalties from rewarding their executives by way of golden parachutes, stock options, bonuses, or other forms of compensation, and would be prevented from buying back their own stock.

The terms of the proposed bill contrast with the reported outcome of President-elect Donald Trump's recent negotiations with UTEC to stop its plan. He has appeared to move away from his election threat to impose a tax on the imports back into the United States of those companies moving production overseas (with particular reference, at the time, to Ford's decision to move its small-car production out of the United States to Mexico).

TAGS: compliance | tax | tax compliance | law | corporation tax | Mexico | legislation | United States | tax breaks | exit tax | penalties | BEPS

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