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Curtailing the Outsourcing Epidemic: Lawmakers’ Fight to Bring Back Jobs

With more and more American jobs lost overseas every day, the never ending recession, and colossal federal deficit, Congressman Rep. Tim Bishop (D-NY) has come up with a solution to curtail the downhill spiral of the American economy-The Stop Outsourcing and Create American Jobs Act of 2010.

Along with Rep. Tim Bishop, Jerry McNerney (D-CA) and Gary Peters (D-MI) introduced The Stop Outsourcing and Create American Jobs Act of 2010 (H.R. 5622) in order to keep the flow of money within the borders of the United States. A few proposals of the bill include increasing civil and criminal penalties for corporations that not only outsource American jobs but also use overseas tax havens to avoid paying their full share of taxes.

In 2008, the Government Accountability Office (GAO) conducted a study that estimated 83 out of the 100 biggest public corporations have subsidiaries (entities controlled by a larger entity) in overseas countries or jurisdictions.

The reasons many corporations choose to set-up-shop overseas is because foreign tax structures are much more favorable than U.S. tax regulations and also because foreign labor costs are much cheaper than American labor expenses.

Jobs Lost to Outsourcing

The exact number of jobs or tax revenues lost to outsourcing is hard to measure because by law, U.S. companies are not required to document or report these statistics. Although, according to the Council on Foreign Relations, Forrester, a research consulting company, estimates that companies offshored roughly 400,000 American services jobs within the last 10 years and roughly 2 million manufacturing jobs since 1983. Forrester predicts that, on average today, 20,000 jobs per month move overseas. Senator Kirstin Gillibrand (D-NY) claims New York State, in particular, has lost more than 160,000 manufacturing jobs since 2001.

These numbers simply provide a guesstimation, but may lead some to deduce that these figures directly correlate to the loss of American jobs and thus American tax revenues.

However, some argue that outsourcing provides substantial benefits to the United States through cheaper imports. Catherine Mann of the Institute of International Economics cites one example. She professes that personal computer prices drastically dropped in the 1990’s due to the reduction in chip prices when manufacturers’ set-up shop offshore.

Whether the new initiative will help bring back American jobs or tax revenues remains to be seen. The bill is currently under consideration in the House Committees on Ways and Means and Government Reform.

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