Clinton proposes new manufacturing incentives, crackdown on corporate inversions
Source: Wash post
Democratic presidential candidate Hillary Clinton is adding to her package of economic revitalization plans this week with new tax incentives aimed at boosting American manufacturing and penalties for businesses that try to avoid taxes through offshore mergers.
Clinton was outlining her manufacturing proposal on Tuesday in New Hampshire, and will discuss ways to discourage so-called corporate “inversions” during stops on Wednesday in Iowa. Those two states hold the first 2016 presidential selection contests in February.
Both plans are part of a detailed set of proposals intended to improve the bottom line for the middle class, whose declining fortunes Clinton has made the organizing principle of her second run for the White House.
She would offer a significant new tax credit to encourage investment in areas of the country that are losing manufacturing jobs. Her campaign says the “Manufacturing Renaissance Tax Credit” would allow tax relief for localities facing layoffs or the loss of a manufacturing plant.
Clinton’s campaign said the tax credit would expand on an existing program called the New Markets Tax Credit to encourage investment in hard-hit areas. The goal is to attract new capital, business and jobs while offering incentives for renovating or repurposing manufacturing facilities.
Clinton’s proposed new “exit tax” would crack down on U.S. companies that try to shift profits overseas through “inversion” deals. In such deals a company in one country merges with a company in another country with lower taxes and then claims the new address for tax purposes. The proposal follows last month’s announcement by U.S.-based Pfizer Inc. that it would buy Allergan, creating the world’s largest drug manufacturer and moving the company headquarters to Ireland.
“This proposed merger, and so-called inversions by other companies, will leave U.S. taxpayers holding the bag,” Clinton said at the time.
Clinton backs an Obama administration proposal to discourage inversion deals, and would go farther with the new proposed tax. Currently, U.S. companies can reincorporate overseas by buying or merging with a foreign company and then transferring more than 20 percent of shares to foreign owners. Obama has proposed raising that threshold to more than 50 percent foreign ownership.
Clinton’s tax would apply to companies that still seek to move their headquarters overseas despite the higher threshold. It would tax foreign earnings at the time of the deal. Details of the proposal were first reported Monday by The Associated Press.
Last week, Clinton proposed spending $275 billion to revitalize crumbling infrastructure, and made the point that doing so will create manufacturing, construction and other jobs.
“Manufacturing is critical to the U.S. economy. It is responsible for high-paying, high-skilled jobs, and a long-term driver of innovation that leads to new industries and the next generation of domestic jobs,” Clinton’s campaign said Tuesday.