Jumpstart Our Business Strength (Jobs) Act

JUMPSTART OUR BUSINESS STRENGTH (JOBS) ACT

AMENDMENT NO. 3108

Ms. COLLINS. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

The PRESIDING OFFICER. The clerk will report.

The assistant legislative clerk read as follows:

The Senator from Maine [Ms. Collins] proposes an amendment numbered 3108.

Ms. COLLINS. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment is as follows:

(Purpose: To provide for a manufacturer's jobs credit, and for other purposes)

On page 139, between lines 13 and 14, insert the following:

SEC. __. MANUFACTURER'S JOBS CREDIT.

(a) IN GENERAL.-Subpart D of part IV of subchapter A of chapter 1 (relating to business-related credits), as amended by this
Act, is amended by adding at the end the following:

"SEC. 45S. MANUFACTURER'S JOBS CREDIT.

"(a) GENERAL RULE.-For purposes of section 38, in the case of an eligible taxpayer, the manufacturer's jobs credit determined under this section is an amount equal to the lesser of the following:

"(1) The excess of the W-2 wages paid by the taxpayer during the taxable year over the W-2 wages paid by the taxpayer during the preceding taxable year.

"(2) The W-2 wages paid by the taxpayer during the taxable year to any employee who is an eligible TAA recipient (as defined in section 35©(2)) for any month during such taxable year.

"(3) 22.4 percent of the W-2 wages paid by the taxpayer during the taxable year.

"(b) LIMITATION.-The amount of credit determined under subsection (a) shall be reduced by an amount which bears the same ratio to the amount of the credit (determined without regard to this subsection) as-

"(1) the excess of the W-2 wages paid by the taxpayer to employees outside the United States during the taxable year over such wages paid during the most recent taxable year ending before the date of the enactment of this section, bears to

"(2) the excess of the W-2 wages paid by the taxpayer to employees within the United States during the taxable year over such wages paid during such most recent taxable year.

"© ELIGIBLE TAXPAYER.-For purposes of this section, the term 'eligible taxpayer' means any taxpayer-

"(1) which has domestic production gross receipts for the taxable year and the preceding taxable year, and

"(2) which is not treated at any time during the taxable year as an inverted domestic corporation under section 7874.

"(d) DEFINITIONS.-For purposes of this section, W-2 wages and domestic production gross receipts shall be determined in the same manner as under section 199.

"(e) CERTAIN RULES MADE APPLICABLE.-For purposes of this section, rules similar to the rules of section 52 shall apply.

"(f) TERMINATION.-This section shall not apply to any taxable year beginning after December 31, 2005.".

(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.-Section 38(b) (relating to current year business credit), as amended by this Act, is amended by striking "plus" at the end of paragraph (29), by striking the period at the end of paragraph
(30) and inserting ", plus", and by adding at the end the following:

"(31) the manufacturer's jobs credit determined under section 45S.".

© CLERICAL AMENDMENT.-The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following:

"Sec. 45S. Manufacturer's jobs credit.".

(d) EFFECTIVE DATE.-The amendments made by this section shall apply to taxable years beginning after December 31, 2003.

On page 335, line 8, strike "December 31, 2004," and insert "the date of the enactment of this Act".

Ms. COLLINS. Mr. President, before I turn to the subject matter of the amendment which I have just submitted, I rise to take a moment to thank my colleagues on both sides of the aisle for their courtesy, and in particular to thank the chairman and the ranking member of the Finance Committee and their staffs for their assistance in advancing this important legislation and in helping to bring this amendment to the Senate floor.

Over the past year, the American economy has emerged from a period of recession and slow growth into a period of economic recovery. The last half of 2003 saw the strongest growth in two decades and the growth continues to be strong, 4.2 percent in the first quarter of this year, a clear sign of a healthy and sustainable economic rebound.

There are hopeful signs on the job front, too. Last month, 308,000 new jobs were added to our Nation's payrolls. This is very good news, but the recovery has not affected all sectors equally. One sector in particular, manufacturing, is struggling to cope with the long-term decline that has cost so many workers their jobs.

Job losses in the manufacturing sector did not begin with the recent recession, nor with this administration. It is not a Democratic issue or a Republican issue. In each decade since World War II, employment in the manufacturing sector has declined as a share of total employment. In absolute terms, the number of American manufacturing jobs has fallen each year since the end of 1997. In fact, if one examines the past 84 months since March of 1997, the number of manufacturing jobs has declined each and every month except 7.

No State has been harder hit by the loss of manufacturing jobs than my home State of Maine. According to a study by the National Association of Manufacturers, on a percentage basis Maine has lost more manufacturing jobs than any State in the Nation. We have lost nearly 18,000 jobs during that period, good jobs that once provided lifelong employment to Mainers living in communities such as Millinocket, Brewer, Wilton, Waterville, Fort Kent, Dexter, Westbrook, and Sanford.

Many people are asking: Why are so many manufacturing jobs in this country disappearing?

According to a recent study conducted by the National Association of Manufacturers, one answer is the disparity in manufacturing costs in our country versus other countries. In fact, compared to other countries, it costs an average of 22 percent more to manufacture goods in the United States.

While it would surprise no one that U.S. manufacturers face a higher cost of doing business compared to manufacturers in countries such as China or Mexico, it would be a mistake to assume wage rates alone explain this difference. They do not. In fact, the productivity of the American worker is unrivaled, allowing American workers to receive more value in terms of wages for the goods they produce. As the NAM study states, if wages were the only factor, then:

U.S. manufacturers would be much more dominant . . . in the global markets than the current trade situation suggests.

It is other structural costs such as the high corporate tax rate we impose on manufacturers that make it much more expensive to manufacture goods here in the United States relative to the costs elsewhere. Indeed, the NAM study shows it is significantly cheaper to produce goods even in high-wage industrialized nations such as Japan and France. This fact illustrates the critical impact these high structural costs have on manufacturers in our country.

In essence, these costs have the same effect as imposing a 22-percent additional tax on making goods here, rather than overseas. To compete, American manufacturers must somehow do more with less, move operations overseas, or get out of manufacturing altogether. None of those is a good solution. The result is fewer jobs, a weaker economy, and a manufacturing sector in crisis.

Earlier this session I introduced legislation known as the Growing Our Manufacturing Employment Act. This legislation provides a 9-percent deduction for manufacturing income, and contains additional provisions benefiting the forest products industry, an industry critical to manufacturers and jobs, good jobs in my home State. I am very pleased the underlying bill we are considering, the JOBS Act, has already been amended to accelerate the deduction for manufacturing income and it contains these important forestry provisions. But I believe we need to go further to address the loss of these vital manufacturing jobs. For that reason, I am offering the final provisions of the Growing Our Manufacturing Jobs Act as an amendment to this bill. My amendment is aimed at reinvigorating the manufacturing sector, boosting the level of domestic manufacturing, and preventing the further loss of these important jobs.

My amendment would help to reduce the 22-percent cost differential American manufacturers face by providing a jobs tax credit to those manufacturers that increase their payrolls by hiring displaced workers who are receiving trade adjustment assistance. That would mean we would be providing an important incentive for manufacturers to rehire workers who have been laid off because of the impact of foreign competition.

In Maine alone, nearly 60 manufacturers are currently TAA-certified, and more than 4,200 Maine workers have been deemed eligible for benefits under TAA since the start of 2002. The credit I have suggested would provide a powerful incentive to hire these workers and help them get back to work.

This credit is very carefully targeted. For that reason, it carries a modest pricetag, which, thanks to the efforts of the Finance Committee, would be fully offset by other provisions included in the amendment.

Finally, this amendment is designed to ensure only those companies that are helping to build America's manufacturing base obtain the credit. It has both a carrot-and-a-stick approach. Companies that move jobs offshore will see their benefits reduced. Most important, companies that chose to reincorporate in offshore tax havens to avoid American taxes will not be eligible for this credit.

I am hopeful that by working together on this proposal and the important provisions of the underlying bill, we can take the important steps that are needed to strengthen American manufacturers, to preserve our manufacturing capacity and, most of all, to help ensure hard-working Americans have the jobs they need and deserve.

Let me once again thank the chairman and the ranking member for their ongoing efforts to advance this significant legislation. It has been a pleasure working with them to bring this proposal before the Senate. Few subjects the Senate will address this year are as important as creating and protecting good jobs, and few bills are as important to advancing that goal as the legislation before us today.

I yield the floor.