Can we outsource Debbie Stabenow?

 

When I think of great economic thinkers in the Senate, one of the last people that comes to mind is Michigan’s Debbie Stabenow. Yet somehow she retains a seat on the Senate’s powerful Finance Committee. Then again, some Senators can praise Osama Bin Laden and keep a seat there (cough! Patty Murray! cough!) so there are worse things.

When talking about tax and economics in the Senate, other lightweights also come to mind: Sherrod Brown, Dick Durbin, and Chuck Schumer — all partisans who aren’t serious tax practitioners. Coincidentally, Debbie rounded all of them up and introduced a tax bill with them! Dear God, help us. Can we please outsource them? Or the responsibilities of their staff to competent people?

What have they come up with? Let me tell you a bit about S. 3364, the “Bring Jobs Home Act.” Like Disney’s Homeward Bound — The Incredible Journey, Stabenow et. al think they have devised a scheme whereby all of these jobs can find their way home. Unless, of course, they’re angling to steal jobs that were never located here.

In an effort to paint Mitt Romney as a villain, Democrats are focusing on outsourcing. Or, in economic parlance: efficiently allocating scarce resources (labor and capital) to their most productive uses. Apparently, this is something that is unfamiliar to the voters of Ohio, Michigan, Illinois, and New York, as evidenced by the fact that they’ve decided Brown, Stabenow, Durbin, and Schumer should be in the Senate and not in used car sales.

What does S. 3364 do? A few things:

  • Places a new section in the Internal Revenue Code that defines “outsourcing expenses.”
  • Denies businesses the ability to claim expenses (which aren’t limited just to foreign outsourcing) if they are used under the new definition of “outsourcing expenditures” — i.e. if the job goes abroad. [Note: Outsourcing your job to another state or possession of the United States, like Puerto Rico or the Northern Mariana Islands is just fine. Under current law, the cost of moving personnel and components of a company to a new location is a deductible business expense.]
  • Places a new section in the IRC that defines “insourcing expenses.”
  • Creates a new tax credit of up to 20 percent of the costs of eliminating a business operation in a foreign country and moving it to the U.S. or its possessions. [Note: The expenses used to qualify mirror those in Section 162 of current law, and insourcers might be able to claim both current law and the new credit.]

What do businesses get for currently investing in, say Detroit or Cleveland? A poke in the fucking eye. Nada. Which is certainly telling about this bill’s intentions, namely it’s just a political — not a serious — bill.

I’m of the view that it is not the job of our politicians or tax code(s) to encourage/discourage any type of business over another, or provide special benefits/punishment for locating in area X or area Y. It is in our societal best interest to allow people to choose to source their business or business interests where they deem best.

Politicians do not know better than business owners how to run their business. If you somehow disagree with this notion, I’d humbly respond that these same geniuses have done such a bang up job running our government. It’s best to not let them meddle in the affairs of businesses. The last thing we need is businesses run like our government.

America is not a prison — people and companies are free to leave for any reason without fear of punitive measures. America, and its states and cities, ideally should be places where people are free to come and go. If the goal is to make us an attractive place to do business that is competitive, the solution is not to punish people for making rational decisions that suit their own interest and entice those that previously made those decisions with a new blanket deduction. Stabenow and her ilk are advocates of what I call Hotel California Economics — “you can check out anytime you like, but you can never leave.”

American citizens get tax breaks for outsourcing themselves to better jobs — because they can deduct moving expenses. Should we eliminate those evil expenses too? Should we start punishing citizens for wanting to move to other states/countries if there is a good job there?

The solution is not Debbie Stabenow’s “You took our jobs, now we’re trying to take yours” bill. It’s to make America more competitive on the tax and regulatory front. That means reforming our federal tax code, one of the most uncompetitive in the world. It means reforming our federal and state regulatory regimes to make regulations less burdensome (not necessarily less effective.)

If you want to attract jobs to the U.S. make it more competitive, not more punitive. That’s just petty, silly, and economically stupid. But we’re talking about Debbie Stabenow, Chuck Schumer and Sherrod Brown. We shouldn’t expect much. These are the sorts of people who think all outsourcing is bad unless that outsourcing is coming to Detroit. They’re nincompoops.

Oh, the best part? This bill is a money loser. The Joint Committee on Taxation — the scorekeeper for tax proposals — estimates the bill will add $87 million to the deficit over 10 years. The good news? This bill is pure political theatre and it isn’t going anywhere. 

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