U.S. Rep. Jerry McNerney (D., 11th District) has introduced a bill to stop outsourcing by cracking down on what he calls "tax loopholes" that encourage companies to move jobs abroad. It would also help ensure that corporations with government contracts do not ship jobs overseas.
"Tax dollars spent from this government should create jobs in this country, not overseas," McNerney said.
The bill, H.R. 5622, directs the Secretary of the Treasury to establish a list of "corporate tax haven countries" and then increases civil and criminal penalties for corporations guilty of a variety of illegal transactions involving a tax haven country, such as fraud, false claims and tax evasion. A 2008 study by the Government Accountability Office (GAO) estimated 83 out of the 100 biggest public corporations have subsidiaries in tax haven countries or similar jurisdictions.
H.R. 5622 would also penalize companies with government contracts that used outsourced labor. Company officials who lie about whether they've outsourced jobs would face penalties up to the amount of the contract they're seeking, and would be banned from doing business with the government for two years. Money generated by the bill would be used to pay down the country's debt.
"Right now, when we're having high unemployment it just makes sense for us to look at how to keep jobs in this country," McNerney said. "The statistics show that Silicon Valley has lost 100,000 jobs over the last 10 years."
The bill, known as the "Stop Outsourcing and Create American Jobs Act of 2010," requires federal agencies to request information about corporations' outsourcing practices when applying for government contracts. It also allows preference for contracts to be given to companies that have not outsourced jobs in the last year.
"One thing I hear a lot about over the last four years is people concerned about outsourcing," McNerney said.
He noted that he'd recently heard from constituents who'd lost jobs to the overseas market, including one woman who trained new employees from Brazil, then was laid off, with her job likely going to one of the new employees she'd trained. Another lost his job to outsourcing and found another job -- only to lose it when that job was outsourced, too.
The Brookings Institution estimates that by 2015, the San Francisco and San Jose metro areas will lose up to 4.3 percent of their jobs to outsourcing. An estimated 3.4 million service jobs may be outsourced overseas by 2015, in addition to the extensive job losses that have already occurred in the manufacturing sector, according to a report from the Congressional Research Service, a non-partisan feature of the Library of Congress.
The bulk of the jobs lost so far have been in manufacturing, office support, computer programmers and software engineers, medical transcriptionists, paralegals and technical writers, many of the same types of jobs for which Silicon Valley is known.
It's early in the life of the bill, but McNerney expects to get some backing.
"I've got a couple of co-sponsors so far," he said. "I suspect we'll see more support for this in the next few weeks. I'm going to push hard on this because I want to see outsourcing reduced and I want to see American jobs increase."