by Beth Bacheldor

Brand New Anti-Offshore Bill: Politics or Progress?

Sep 27, 2010
Enterprise Applications

A group of Democratic Senators have introduced a new bill aimed at creating jobs and deterring offshoring. Will it work?

Sen. Dick Durbin (D-Ill.), has taken up his fight against offshoring with new legislation they say will create jobs here and discourage the practice of shipping jobs overseas.

Called the Creating American Jobs and Ending Offshoring Act, the bill (introduced last week) would give companies a break from paying payroll taxes by reducing the amount of Social Security taxes they would have to pay for newly hired employees who replace workers doing similar jobs overseas. The bill requires that the business certify the new hire is replacing an overseas worker, and the tax break would continue 24 months for employees hired during a three-year period starting today.

There are also discouragements for businesses that offshore. Under the legislation, businesses would be blocked from taking any deduction, loss or credit for costs related to reducing or ending U.S. operations while expanding similar operations outside of the United States. It would also change current tax laws that allow companies to defer paying U.S. tax on income earned overseas until the profits are brought back to the United States.

It’s being reported that Durbin and other Democrats plan to bring the bill, S.3816, up for a vote Tuesday. Durbin introduced the bill with 7 other fellow senators, including Sen. Barbara Boxer (D-Calif.), Sen. Harry Reid (D-Nev.), and Sen. Charles Schumer (D-N.Y.).

Durbin is no stranger to legislating against offshoring. He’s behind the H-1B and L-1 Visa Reform Act of 2009, which he introduced with Sen. Chuck Grassley (R-Iowa). That bill has been in committee since April 2009 and is expected to stay put through the remainder of the year (you can read more on that in this article, The Truth About the H-1B and L-1 Visa Reform Act of 2009).

Not everyone (surprise!) likes Durbin’s latest bill. Republicans are criticizing it, and the U.S. Chamber of Commerce is against it, saying it really won’t have much impact and could instead hurt the economy and lead to job cuts.

I think there are excellent points on both sides of the argument, and I believe this offshoring issue is one of the thorniest issues the U.S. IT market—and businesses at large–has had to deal with in years. There are so many layers of complexity. I think the readers here at have some of the best insight, so let’s hear it!

Do you think this latest legislative proposal makes sense? Will it curb offshoring in ways that are positive to individual U.S. workers and the U.S. economy? Could it actually hurt the economy, as some predict? Or are the arguments for and against little more than political pandering during the hotly-contested march to mid-term elections?