New Tax Measures to Boost Manufacturing and Jobs in the US

January 12, 2012 Taxation in USA

Tax Breaks in the USWASHINGTON D.C. – President Barack Obama is set to push for new tax measures aimed at raising national employment levels by encouraging firms to move their manufacturing operations to the US.

While giving a speech at the Insourcing American Jobs forum in Washington D.C. on January 12th, the President Barack Obama announced that by the end of February he will propose several new tax measures which, according to him, will reduce the number of companies outsourcing manufacturing work overseas, and will improve the country’s attractiveness as a destination for manufacturing and production.

The President said that, if passed by Senate, the upcoming proposal will give tax breaks to companies which move their operations from overseas back to the USA and which hire local employees. It is expected that the measures will lower the net cost of manufacturing, boost employment and increase growth of the US economy. As an additional measure, current tax benefits available to companies which outsource their production internationally will be removed.

During his speech, Barack Obama did not reveal details of the tax mechanisms that will be employed. However, analysts have suggested that the potential measures could include profit repatriation schemes, beneficial depreciation rules, lowered tax rates on profits derived from high-tech products developed in the USA, tax breaks for companies holding patents in the USA, and new tax incentives for companies performing research and development nationally.

While describing the international economic climate, the President explained that the world was at an “inflection point” and with the rising costs of labor in China and India, the US has a good opportunity to draw in multinational companies to encourage enterprises to establish local manufacturing bases.

Photo by Maitri