Outsourcing manufacturing has significantly impacted the United States economy, leading to job losses and reduced industrial capacity. To address this issue, this proposal suggests a policy that adjusts the corporate tax rate proportionally to the percentage of a company’s products researched, developed, and manufactured within the United States. This approach incentivizes companies to bring manufacturing back home, stimulate economic growth, and enhance national security.
Policy Details
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Corporate Tax Rate Adjustment Mechanism
Baseline Tax Rate: Maintain the current federal corporate tax rate as the baseline.
Proportional Reduction: Reduce the corporate tax rate proportionally based on the percentage of domestic production.
Example: If a company produces 100% of its products domestically, its corporate tax rate would be reduced to 0%. If it produces 50% domestically, it would receive a 50% reduction on the baseline tax rate. -
Calculation of Domestic Production Percentage
Inclusions:
R&D: Investments and activities conducted within the U.S.
Manufacturing: All manufacturing processes are carried out on U.S. soil.
Raw Materials: Sourcing of raw materials from domestic suppliers.
Exclusions:
Imported components or raw materials.
Offshore R&D and manufacturing activities.
Compliance and Verification
Reporting Requirements & Auditing: Companies must submit annual reports detailing their production processes, including the origin of raw materials, R&D activities, and manufacturing locations.
Penalties: Implement penalties for false reporting or non-compliance, such as fines or revocation of tax benefits.