Trump didn’t know the GOP tax bill incentivizes business to offshore jobs

Rebekah Entralgo

Rebekah Entralgo Reporter, ThinkProgress

President Donald Trump was apparently unaware that a provision in his biggest legislative accomplishment encourages corporations to offshore jobs.

Sen. Sherrod Brown (D-OH) spoke with Trump Wednesday night about the closure of at least five General Motors plants, including one assembly plant in Lordstown, Ohio, and filled him in on how the GOP tax bill is partly to blame.

“I reached him last night, he said he wanted to help, I said the first thing you could do is you could take away that tax provision in his tax bill that gives a company a 50 percent off coupon on their taxes,” Brown told CNN’s New Day Thursday. “If you’re producing in Lordstown you pay a 21 percent tax rate, if you move to Mexico you pay a 10.5 percent tax rate, and I told the president to get rid of that tax break that encourages jobs to move overseas.”

The president apparently did not know that was in the tax bill.

It’s difficult to believe that Trump didn’t know a significant result of the GOP tax bill would be a worsening of offshore tax dodging — especially when his own Congressional Budget Office (CBO) said it would. A report in April suggested corporations may be incentivized under the legislation to offshore “tangible assets” like factories and offices, and yes, jobs.

“By locating more tangible assets abroad, a corporation is able to reduce the amount of foreign income that is categorized as GILTI (Global Intangible Low Taxed Income),” the report stated. “Similarly, by locating fewer tangible assets in the United States, a corporation can increase the amount of U.S. income that can be deducted as FDII (Foreign-Derived Intangible Income). Together, the provisions may increase corporations’ incentive to locate tangible assets abroad.”

Those findings echoed previous analysis from non-partisan agencies like like the Institute on Taxation and Economic Policy, which found the Republican Tax Cuts and Jobs Act would make offshore tax dodging even worse than it was before The Center on Budget and Policy Priorities similarly found that the plan is “likely to lead to more outsourcing of U.S. jobs and a larger trade deficit” due to its tax cuts for overseas profits.

Brown had reportedly reached out to the president earlier in the year when the first phase of layoffs at Lordstown occurred, but nothing was done. Now, with a key 2020 re-election campaign on the horizon and a mountain of bad press, Trump seems intent on saving face with voters in the key purple state of Ohio.

Brown told CNN that Trump subsequently expressed an interest in signing onto his American Jobs, American Cars Act that would eliminate the incentive for corporations to move jobs overseas and provide consumers with a $3,500 price deduction on a purchase or five-year lease of a new, American-made car.

“He said he wants to fix it, I take him at his word,” Brown said. “I’m working with his trade representative and we’re going to go to town on it in the next few weeks.”

Only time will tell if the president will follow through on his word to work with Brown, who is exploring a run for president in 2020. Earlier in the week Trump blamed Brown, but not Ohio Republican Sen. Rob Portman, for the GM closures.

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Reposted from Think Progress

Posted In: Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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