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Joe Biden promises Michigan workers: He'll tax companies that move job overseas

News Source

In a speech given in Warren, Democratic nominee Joe Biden on Wednesday unveiled a plan to tax companies that move work overseas at a higher rate and reward those that bring jobs back into the U.S.

In any other campaign, it would be a proposal directly from the Democratic playbook, but given that President Donald Trump has made the same claims a central part of his presidency, it came as a frontal assault on Trump's economic record in a state the president won by just two-tenths of 1% four years ago.

"(Trump's) on track to be the first president since Herbert Hoover and the Great Depression to see the number of jobs in our economy go down, not up, while being president," Biden said. 

"Even before President Trump’s failed response to COVID-19 crashed our economy, his reckless and chaotic trade policy had thrown American manufacturing into a recession — it was already contracting in 2019."

Biden, the former vice president, met Wednesday afternoon with UAW members and held a roughly 26-minute live-streamed campaign event at the union's Region 1 headquarters in Macomb County. The campaign stop came one day ahead of a Trump rally scheduled in Freeland, near Saginaw. 

Biden sharply criticized Trump's handling of the economy even before a steep slide caused by the coronavirus pandemic while arguing the 2017 tax bill encouraged companies to move jobs overseas.

If elected, Biden said he would:

  • Push for legislation that would increase the top corporate tax rate and implement an additional surcharge on any production moved out of the U.S. on goods and services to be sold or provided back into the U.S. Information provided by the campaign stated he's proposing a hike from 21% to 28%, a move that would bring the rate on profits from those activities to 30.8%.

  • Ask Congress to approve a 10% "Made in America" tax credit to companies making investments that would create or relocate jobs inside the U.S., allowing them to use the credit in advance of the actual job creation as long as it is used on activities such as reopening closed plants or investing in new equipment that leads to the jobs.

  • Sign executive orders during his first week in office that would strengthen so-called Buy American provisions that encourage the purchase of American-produced goods and services in public contracts and require more transparency as to where goods and services are ultimately originating.

Throughout his 2016 campaign and four years of his presidency, Trump has made a key component of his agenda returning jobs from overseas, especially manufacturing jobs, saying he would target companies, including automakers, who moved U.S. production out of the country.

While he can point to successes doing so in the first years of his term, there was evidence that the economy was slowing even before the coronavirus hit, and Biden's campaign noted reports that more jobs were returned from overseas in 2016, the last year of President Barack Obama's second term, than were returned in 2019.

The Free Press reported last week that while manufacturing in Michigan had seen some gains before the pandemic hit, they were far less than those seen during Obama's second term, and that auto and auto parts manufacturing jobs had actually declined while the average amount of U.S. content in vehicles sold by the three Detroit-based automakers had declined. 

Trump also never followed through with threats during the campaign and his presidency to unilaterally impose tariffs on U.S. auto production and other manufacturing moved out of the U.S., though he did place tariffs on certain goods and those from certain countries, including China. There has been some evidence, however, that those actions hurt the economy.

"Under President Trump, the U.S. trade deficit has grown. It's hit an all-time high.

Let me say that again — the U.S. trade deficit is at an all-time high under Trump in the last three years," Biden said during the event. 

"And President Trump’s answer to all of this is the same as his answer to everything — corporate tax giveaways that actually reward offshoring."

The U.S. trade deficit in July hit its highest levels in the last 12 years, according to a report last week from the Associated Press

The former vice president's accusation on corporate giveaways repeats Democratic claims that the 2017 tax cuts, while including breaks for most taxpayers, were skewed toward helping corporations and the wealthy.

Trump, however, clearly can point to a stock market that saw significant gains — albeit with volatile activity — during his term compared to Obama's second term and to job creation in manufacturing and other sectors, especially during his first two years.

The president is also coming off strong economic gains reported late last week with some 1.4 million jobs added in August as the nation continued its return from the depths of the pandemic slowdown, though the overall number of jobs remains well below its pre-COVID-19 highs. The unemployment rate nationally fell from 10.2% in July to 8.4% in August, but that compares to a rate of 3.7% in August 2019.

In announcing his plan, Biden was targeting what many critics of the 2017 tax bill claim is a loophole that may encourage businesses to shift some operations overseas. That legislation made it more difficult to delay paying taxes on overseas investments but put in place a lower rate than the top corporate rate — 10.5% — on those investments above a certain profit threshold they say is an incentive to move operations offshore.

Despite Biden's criticism, there have also been questions about whether the 2017 tax law encourages offshoring of jobs to the degree he and the Democrats suggest, with conservative supporters arguing it actually encouraged companies to return investment to the U.S. by lowering the tax rate on those profits, rather than charging more than most other industrialized countries.  

Biden's plan, meanwhile, still lacks several details to be made public, such as how the job creation tax credit would be enforced and if companies would be forced to repay credits that were given but didn't result in the number of jobs promised.

A release on the proposal also suggested it would be strongly linked to manufacturing jobs and closed plants, as well as occupations such as call service centers — though it was unclear whether it would apply to any job being moved from overseas.

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