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Hillary Clinton Campaign Press Release - Clinton Announces "Insourcing" Agenda At 21st Century Jobs Summit

April 02, 2008

Would Provide $7 Billion In Tax Incentives And Investments For Firms Creating Jobs in America

In Pittsburgh today, Hillary Clinton announced a groundbreaking policy initiative that would eliminate tax incentives for companies that outsource jobs and use the savings to encourage U.S. companies to create – or "insource" – jobs here in the United States. Her insourcing agenda provides $7 billion per year in new tax benefits and investments to help companies create high-paying, high-quality jobs here in the U.S. and to compete in the global economy. Hillary made the announcement at an economic summit hosted by the campaign focused on "Jobs For the 21st Century." The event also marked the end of Hillary's six-day Solutions For The American Economy Tour.

Her insourcing plan would enact the largest expansion of tax benefits for research and job growth; create at least 15 new "Innovation and Research Clusters" across the country, launch a new "Insourcing Markets Tax Credit" to spur business investment communities facing global competition, and catalyze the 21st Century manufacturing sector with several bold new programs, including the "Made Green In America" Fund, which would provide $500 million annually in investments to encourage the creation of high-wage jobs in clean energy manufacturing technologies.

"We reward companies like Exxon-Mobil who park $56 billion in profits overseas because they don't have to pay a dime in U.S. taxes on those profits. And we're using your tax dollars to reward companies that ship your jobs overseas," said Clinton. "My insourcing agenda is based on a different approach. I believe our government should get out of the business of rewarding companies for shipping jobs overseas, and get back into the business of rewarding companies that create good, high-wage jobs – with good benefits – right here in America."

Hillary discussed the details of her proposal during her campaign's "Jobs For The 21st Century" summit, which took place at the local International Brotherhood of Electrical Workers (IBEW) Conference Center & Training Facility.

Clinton started her day touring the Pittsburgh Life Sciences Greenhouse, a biotechnology initiative and non-profit organization that provides resources and tools to entrepreneurial life sciences enterprises to advance their research and patient care. She then came to the IBEW center and toured the training facility before hosting two panels about the emerging economy and job growth.

The first panel focused on how research and technology will be a primary driver for jobs of the future. During the first panel dicussion, Hillary was joined by John Manzetti, President and CEO of Pittsburgh Life Sciences Greenhouse; Don Smith, Vice President of Economic Development for Carnegie Mellon and University of Pittsburgh; and Christine Pambianchi, Senior Vice President, Corning, Inc.

During the next panel, a second group of local and national experts discussed workforce redevelopment and green jobs. Panelists joining Hillary included, Dave Malone, Chair of the Pennsylvania Workforce Investment Board; Marge Krueger, Administrative Director to the Vice President, Communications Workers of America International; Bill Cagney, Business Manager for Operating Engineers Local 95; and Dr. Nabil Nasr from the Center for Integrated Manufacturing Studies.

HILLARY CLINTON'S INSOURCING AGENDA

To maintain our competitive edge in the global economy, Senator Clinton has laid out a comprehensive economic plan to lower healthcare costs, restore fiscal discipline, rebuild our infrastructure and create at least five million green collar green jobs. Today, she announced a new set of initiatives to spur innovation and reward companies that are creating good, high-paying jobs in the United States:

  • Enacting the Largest Expansion of Tax Benefits for Research and Job Growth in a Generation: Increase the existing R&D credit by 50% and create a new 40% R&D credit for basic research. These steps will reward high-wage job growth in the U.S. and help make U.S. manufacturers and research companies more globally competitive.
  • Creating New High Tech Jobs With at Least 15 New Innovation and Research Clusters Across the U.S.
  • Launching a New Insourcing Markets Tax Credit to Spur Business Investment in Communities Facing Global Competition.
  • Catalyzing a 21st Century Manufacturing Sector with a New MARPA-Research Program, a Green-Manufacturing Extension Program and Made Green in America Fund: These initiatives will help small- and medium-sized manufacturers prosper, including in new renewable and clean energy markets.

ELIMINATE TAX INCENTIVES TO MOVE JOBS AND CAPITAL OVERSEAS: Senator Clinton will eliminate the tax incentives and lax enforcement that make it easier to ship jobs and capital overseas:

  • Ending Deferral that Rewards Moving Jobs Overseas: Reform the practice currently known as "deferral," which allows companies to defer paying U.S. taxes on income earned by their foreign subsidiaries.
  • Closing Abusive Tax Loopholes: Prevent companies from using approaches like transfer-pricing and cross-crediting to shift assets, production or profits to low-tax jurisdictions. Eliminate the unfair advantage that foreign insurers located in tax havens have against U.S. insurers.

1. Enact the Largest Expansion of Tax Incentives for Research and Job Growth in a Generation: If the US wants to remain as the global leader for cutting edge research, innovation and high-wage job growth, we must update our tools for rewarding these activities. The R&D tax credit has proved to be a successful, cost-effective tool to increase investment in research jobs in the United States and to make the U.S. a more attractive venue for global R&D. [Atkinson, 2007]. In fact, every dollar spent on the credit leverages more than $2.00 in private research spending. [Gupta, Hwang, and Schmidt, 2006]. And the "R&D" credit is actually a "U.S. jobs" credit because 75% of the credit – and 90% in certain industries – goes to reward the wages of workers performing U.S. based research.

Two decades ago, the U.S. offered the most generous R&D tax benefits in the world. Today, we have fallen to 17th – below even Mexico. At a time of increased global competition and increasing pressure on U.S. wages and jobs, this decline provides further incentive for companies to look overseas when making investment decisions. We need to update this tax credit to respond to the needs of our 21st century economy. Hillary Clinton has already called for making the existing credit permanent to remove uncertainty for U.S. businesses. Today, she proposed the largest expansion in the R&D tax credit in a generation. She will:

  • Increase the R&D credit by 50% to give companies a clear strong incentive to invest in research jobs in the U.S. Senator Clinton will increase the existing R&D tax credit from 20% to 30% -- the largest single increase singe the credit was created in 1981. She will also increase the Alternative Simplified Credit from 12% to 20%
  • Create a 40% Basic Research Credit that will reward collaborative research done to help drive innovation and job growth. Basic research is a vital driver of productivity and job growth in the U.S. economy, but businesses often under-invest in basic research because they cannot always capture that research's full benefits. To help spur jobs in basic research and encourage collaborative research between universities, federal research institutions and private firms, Senator Clinton would create a 40% incremental credit on all qualified investments in basic research.
  • Create a new Start Up Research Jobs Credit, which will give companies with no prior research expenses access to tax incentives. Because the existing R&D tax credit rewards increased investment in research-related jobs, firms that have no prior expenses and therefore no baseline investment amount are not eligible. Senator Clinton would create a new 10% credit for all qualifying R&D spending for start-up firms.

2. Creating New High Tech Jobs Across the U.S. With at Least 15 New Innovation and Research Clusters across the U.S. "Clusters" or "innovation hot spots" are hubs of economic activity that exhibit superior growth rates of investment, productivity, and wage gains for local communities. [Center for American Progress, 2007]. While most people are familiar with Silicon Valley in California, clusters are powerful drivers of regional economies in other places too, such as Central Florida's modeling and simulation cluster and Pittsburgh's ICT (information and communications technology) hub. The ICT hub is a tremendous source of innovation and collaboration, involving the work of Penn State University's Electro-Optics Center, Carnegie Mellon's Software Engineering Institute, a non-profit Technology Collaborative, and 1,500 ICT companies.

Senator Clinton believes we should be aggressively supporting regional clusters that leverage local assets, drive economic growth and create high-wage jobs. In addition to offering her new 40% credit for basic research, Senator Clinton will launch a new program of tax exempt bonds for states and local governments to build research parks. And she will catalyze the creation of at least 15 major research clusters during her first term:

  • New Cluster Innovation Grants: Under this program, state and local governments will apply to the federal government with plans for stimulating their regional economies by building on place-specific assets. The federal government will disburse up $500 million a year in competitive federal matching grants for state and local governments to stimulate their regional economies. In 2003, Governor Ed Rendel launched a similar initiative called "Keystone Innovation Zones" in Pennsylvania which as already leveraged over $400 million of new investments and led to the formation of nearly 200 new companies.

3. A new Insourcing Markets Tax Credit to spur business investment in communities facing global competition. Building off the success of the New Markets Tax Credit Program, Senator Clinton will launch a new public/private partnership to bring new investment and jobs to communities that are vulnerable to global competition, and provide them with the tools to become leaders in our economy. While the NMTC has played a crucial role in bringing investment and job growth to poor and underserved areas, many communities impacted by globalization have acute needs: requiring large and fast-acting infusions of capital to diversify and modernize in the wake of job losses and unemployment.

In addition to reauthorizing the NMTC, Senator Clinton will create a new $5 billion Insourcing Markets Tax Credit dedicated to communities impacted by global competition, trade and technological change. The Secretary of Treasury – in consultation with the Secretary of Labor and Commerce – will determine eligible trade-impacted communities, using relevant economic data and workforce data. Given the goals of modernization and economic diversification in these areas, Treasury will require the community development groups selected to solicit private IMTC investors to put particular emphasis on projects that bring in new industries and companies into these communities as well as create high-quality long term employment. Eligibility for IMTCs will also be expanded to Small Business Investment Corporations (SBICs) that have expertise in trade-impacted industries, such as manufacturing. SBICs have invested more than $4.3 billion in small manufacturing companies during the past decade, even during a challenging time for the industry.

4. Catalyzing a 21st Century Manufacturing Sector with a new MARPA-research program, a Green-Manufacturing Extension Program and Made Green in America Fund. Hillary believes that we cannot remain a great country with a strong economy without a strong, vibrant manufacturing sector. Today, she announced three new initiatives to help catalyze manufacturing research and ensure that the U.S. becomes a leader in clean energy manufacturing.

  • A Manufacturing Advanced Research Projects Agency (MARPA): This new agency would manage and direct basic and applied R&D projects for the manufacturing sector, and pursue research and technology where risk and returns are very high and where success may provide dramatic advances for traditional manufacturing processes.
  • A "Made Green In America" Fund: Hillary will invest $500 million annually in a "Made Green in America" fund to encourage the creation of high-wage jobs in clean energy manufacturing technologies. Today, there are manufacturing firms all over the country that want to transition to building the infrastructure to create new, clean energy sources but do not have the capital to make the change. Under this proposal, domestic facilities that manufacture qualifying clean energy technologies, such as wind and solar, or the components of such technologies, would be eligible to receive awards of up to 30 percent of the costs of engineering, retooling or construction of facilities to manufacture qualifying clean energy technologies. States would have flexibility in implementing the program, but would be directed to give preference to projects that maximize the use of domestically-sourced parts, return idled manufacturing facilities to productive use, re-employ laid off manufacturing workers, provide above-average pay, benefits, and productivity and demonstrate a high-probability of commercial success. In addition to helping established manufacturers move to producing clean energy sources, the Made Green In America Fund will invest in creating business "ecubators" – small firms that are developing and testing early-stage ideas with the potential to transform our energy sources to be cleaner and more sustainable. Pennsylvania would receive at least $20 million per year under this new program to invest in clean energy technology manufacturing.
  • A Green-Manufacturing Extension Partnership (G-MEP): The Manufacturing Extension Partnership (MEP) is a highly effective program that provides technical and business assistance to small and medium-sized manufacturers to help them improve productivity and create and grow the number of good-paying jobs in this country. Hillary has already called for doubling the MEP to support a more vibrant 21st century manufacturing sector. As President, Hillary will create a new G-MEP program as part of the Manufacturing Extension Partnership that will focus on green energy. This new initiative will provide a broad range of tools and technical assistance, and serve as a repository of shared best practices by being linked to G-MEP centers all around the country, for small and medium sized manufacturers who are working to create sustainable energy sources.

5. Close loopholes in our tax code that encourage companies to ship jobs overseas. As President, Senator Clinton will overhaul our international tax system to remove incentives for companies to locate jobs and capital overseas and to crack down on abusive offshore tax havens.

  • First, Senator Clinton will reform the practice currently known as "deferral," which allows companies to defer paying U.S. taxes on income earned by their foreign subsidiaries until or unless that income is repatriated to the U.S. This provision gives a company trying to decide between locating production in the United States or in a foreign low-tax haven an affirmative tax incentive to locate – and continue re-investing profits – overseas. In 2007, Exxon Mobil has $56 billion parked overseas, while Pfizer had $60 billion." [USA Today, 3/20/08]. Deferral not only encourages offshoring, but is economically inefficient. As the Congressional Research Service explained, deferral "reduces economic welfare by encouraging firms to undertake overseas investments that are less productive — before taxes are considered — than alternative investments in the United States." ["Tax Exemption for Repatriated Foreign Earnings," 10/22/2003]. Senator Clinton will reform this provision to remove the incentive for Companies to ship jobs overseas.
  • Second, Senator Clinton will close tax loopholes to ensure that companies cannot continue receiving tax benefits for locating abroad. She will disallow companies from engaging in transfer-pricing arrangements where companies avoid taxes by shifting income or assets to low-tax jurisdictions. She will eliminate incentives in the tax code (like the ability to "cross-credit") that encourage U.S. companies to shift operations or at least profits to low-tax jurisdictions. And she will eliminate the unfair advantage that foreign insurers located in tax havens have against U.S. insurers competing for U.S. business.

Hillary Clinton, Hillary Clinton Campaign Press Release - Clinton Announces "Insourcing" Agenda At 21st Century Jobs Summit Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/293414

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