Since the 2008 recession, the United States government continues to recover financially at a slow pace. Presently, the unemployment rate in the United States is 7.6%. Although the number of unemployed throughout the United States continues to decrease, multiple variables continue to affect the unemployment rate. This month alone, the United States Bureau of Labor Statistics (2013) estimates 11.7 million individuals have become discouraged workers, as defined by unemployed workers no longer looking for jobs because they believe there are not enough jobs available. Another factor that currently impacts the unemployment rate in the United States is the number of people who choose to enter into early retirement or are now receiving disability. Further complicating the economy is the fact that the median income of households has dropped to what it was in 1996, erasing a decade of economic gains. In order to fix these problems a new tax is being proposed. This tax will focus on the number of companies that outsource jobs and provide additional tax benefits for companies that willingly keep jobs in the United States.
There are many reasons that companies choose to outsource jobs to foreign countries. One of the main reasons that is cited is the fact that it is less expensive to use foreign labor in underdeveloped countries. Furthermore, many companies choose to outsource to foreign countries that have minimal requirements in terms of what their laborers are paid. From 2008 to 2010 Forbes (2012) estimates that the United States lost 450,000 jobs to China. This demonstrates that throughout the economic recovery, many companies from the United States continued to outsource labor, directly limiting the amount of jobs available to United States citizens and weakening the domestic economy.
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"Domestication of Jobs: Incentives for Companies to Keep Jobs in the United States".
Providing companies additional tax incentives to ensure positions are kept in the United States is crucial to the economy. This will help to strengthen the domestic economy, increase exports and jobs available to citizens. Presently, there are few incentives to keep companies from outsourcing jobs to foreign countries. The purpose of this tax is to increase the amount of taxes that companies using foreign labor pay and provide additional tax benefits for companies that continue to keep their workers in the United States. Many companies that outsource workers are concerned about the overall cost of production (Forbes, 2012). Regardless of the industry, the production of any type of goods will have some cost endured. However, when outsourcing, companies are bound by the laws of the foreign government in which they choose to employ workers.
Many companies continue to worry about the cost of taxes they will need to pay in order to keep jobs in the United States. Some companies are arguably better at decreasing the cost of taxes they pay than others. This is evident in examining companies that have paid next to nothing in taxes to the United States government over the past two years. Amongst these companies include: JCPenney, AMR Corporation, Lear Corporation, Bank of America and General Motors (Market Watch, 2013). Under this new tax, more companies will be able to decrease the amount of money they owe on an annual basis to the United States government. As previously discussed, many companies are concerned about the overall cost of production. However, in providing benefits for companies that keep jobs in the United States, we are in turn creating new jobs. Furthermore, the long-term cost of production that companies incur will be decreased.
As a whole, outsourcing remains a threat to the domestic economy and strength of the United States government. The ability to provide new incentives for companies to remain in the United States is beneficial as it allows multiple areas of the economy to be strengthened. In addition to strengthening the economy, businesses will further benefit as this tax incentive helps to reduce the cost of production.
- 10 U.S. companies paying the least or no taxes. Market Watch, 2013. Web. 10, April 2013.
- Economic News Release. Bureau of Labor Statistics, 2013. Web. 10, April 2013.
- Job Openings Increase. Bureau of Labor Statistics, 2013, Web. 10, April 2013.
