WASHINGTON, D.C. – Today, U.S. Sen. Sherrod Brown (D-OH) introduced the Patriot Employer Tax Credit Act, a bill that would provide a tax credit to companies that provide fair wages and good benefits to workers while closing a tax loophole that incentivizes corporations to send jobs overseas. The loophole costs the U.S. Treasury approximately $50 billion each year during a time when outsourced jobs and stagnant wages force more American families to turn to safety net programs to make ends meet. Brown was joined in introducing the bill with U.S. Sens. Dick Durbin (D-IL), Jack Reed (D-RI), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), and Bernie Sanders (D-VT).
“We must reward American companies that invest in American workers,” Brown said. “Instead of giving tax breaks for companies that ship jobs overseas, we should give tax incentives to companies that do right by their workers. That means incentives for keeping jobs in the U.S., providing fair wages and benefits, and maintaining diverse workforces that utilize American service members and veterans.”
The Patriot Employer Tax Credit Act would grant a tax credit equivalent to 10 percent of the first $15,000 of wages earned by each employee—worth about $1,200 per qualifying worker depending on the company’s federal effective tax rate—to companies that meet the following criteria:
- Invest in American Jobs: Maintain headquarters in the U.S. if the company has ever been headquartered in America, have not inverted to avoid U.S. taxes, maintain or increase the number of workers in the U.S. compared to the number of workers overseas, and do not decrease the number of workers through the use of contractors.
- Pay Fair Wages: Pay at least 90 percent of U.S. workers an hourly wage equal to 150 percent of poverty for a family of three (about $14 an hour or $30,000 a year).
- Provide Quality Health Insurance: Offer Affordable Care Act-compliant health insurance to employees.
- Prepare Workers for Retirement: Provide 90 percent of non-highly compensated U.S. employees a defined benefit plan OR a defined contribution plan with an employer contribution or match equal to at least 5 percent of worker compensation.
- Support Our Troops and Veterans: Pay the difference between regular salary and military compensation for all National Guard and Reserve employees called for active duty and have a plan in place to recruit veterans.
- Create a Diverse Workforce: Have a plan in place to recruit employees with disabilities.
Companies with fewer than 50 employees, who face different business circumstances than larger corporations, can qualify for the tax credit by fulfilling a subset of these criteria.
To offset the cost of the Patriot Employer Tax Credit, the legislation would close a loophole that allows corporations to deduct interest expenses used to invest overseas—such as the interest costs of building a manufacturing plant overseas or shipping materials abroad—while allowing the company to defer paying taxes on income derived from those investments until it is repatriated.