Taxing time for US firms sending jobs abroad

WASHINGTON • President Donald Trump has said he is working on legislation that would create new incentives for companies to keep jobs in the United States and punish those that move overseas.

Precise details of the legislation are not available and it is unclear whether it is close to being introduced or still in the draft stage. But Mr Trump said it has been in the works for a while.

"Economic-development incentives for companies," Mr Trump said in a Forbes interview published on Tuesday. "Incentives for companies to be here."

Forbes quoted Mr Trump as saying that US companies moving operations to other countries would "get penalised severely... It's both a carrot and a stick".

The President added that the punishment would be making it "very tough for you to think that you're going to be able to sell your product back into our country".

Mr Trump has been threatening a version of this since he was a presidential contender in 2015.

But senior administration officials have never followed through on the plan, and it was not included in the recent tax cut package that he is trying to nail down with Republicans in Congress.

The imposition of such tariffs or taxes has split the business community, with some domestic manufacturers saying it would be a good idea and multinational companies worried it could drive up costs.

Imposing new penalties for companies that move operations overseas could reignite a messy fight that a number of business groups thought they had recently settled.

Retailers, automotive companies and a number of other firms led Republicans to strip a provision out of the GOP tax plan that would have essentially raised taxes on items imported for sale into the US.

The provision was designed in part by House Speaker Ryan, and it would have created incentives for US firms to export more goods, while also raising around US$1 trillion (S$1.36 trillion) in new revenue over 10 years.


A version of this article appeared in the print edition of The Straits Times on October 12, 2017, with the headline 'Taxing time for US firms sending jobs abroad'. Print Edition | Subscribe