January 26, 2012 in Nation/World Obama puts focus on manufacturing Alisa Priddle Detroit Free Press
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Encouraging industry
The White House proposals to stimulate manufacturing:
• Removing tax deductions for expenses related to outsourcing, such as moving expenses for shipping jobs overseas, and providing new incentives, such as a 20 percent income tax credit for the expenses of bringing them back home.
• Narrowing eligibility for current tax deductions for domestic manufacturing, and doubling the deduction for advanced manufacturing from 9 percent to 18 percent.
• Creating a new Manufacturing Communities Tax Credit to help communities that have suffered plant closure and massive layoffs.
• Creating $5 billion in temporary tax credits, predicted to drive nearly $20 billion in domestic clean energy manufacturing.
• Reauthorizing 100 percent expensing of investment in plants and equipment at a cost of $4 billion. This is an extension through the end of the year of a provision that allows businesses to expense the full cost of their investments in equipment.
• Closing a loophole that allows companies to shift profits overseas to avoid taxes, a move estimated to raise $23 billion.
A number of tax proposals form the backbone of President Barack Obama’s blueprint to support American manufacturing by discouraging outsourcing.
A series of six proposals are designed to change aspects of the tax code so a company deciding where to build its products will be swayed to choose the United States rather than a lower-cost country such as China, White House officials said Wednesday.
Gene Sperling and Jason Furman, both of the White House’s National Economic Council, expanded on the president’s State of the Union address in a briefing Wednesday before Obama’s remarks at Conveyor Engineering & Manufacturing in Cedar Rapids, Iowa.
The president is asking companies to think twice when deciding where to build their products, Sperling said. Instead of using past data that focused on lower labor costs in emerging countries, companies are being asked to look 10 years down the road and recognize a shift to greater productivity in the U.S.
Obama’s visit to Iowa started a three-day, five-state tour that concludes Friday at the University of Michigan, where he will discuss retraining for workers and the need for colleges to hold down tuition costs.
The administration said the manufacturing sector added more than 300,000 jobs since December 2009, helped by companies bringing jobs back to the U.S. and making additional investments here. Manufacturing jobs are growing for the first time since the late 1990s, officials said.
The cost of implementing the tax proposals, which Obama wants Congress to act on immediately, would be covered by closing tax loopholes that encourage shifting jobs overseas and shielding profits overseas.