Sen. Sherrod Brown (D., Ohio) wants to close what he says is loophole in the U.S. tax code that incentivizes U.S. automakers to build vehicles outside the United States — and use the revenue that would generate to give buyers a break on vehicles that are built within our borders.
Under the new tax law signed by President Trump late last year, income derived from U.S. firms’ foreign subsidiaries is taxed at 10.5 percent. Income from domestic operations, meanwhile, has a top corporate tax rate of 21 percent.
“That tax bill pretty much says to companies here ‘move overseas and we’ll give you a 50 percent off coupon on your tax rate.’ Our bill answers that,” Mr. Brown said Thursday during a visit to the United Auto Workers Local 12 headquarters on Ashland Avenue.
Mr. Brown’s legislation, introduced earlier this month, would deny that benefit to U.S. automakers who build vehicles outside the country, instead taxing them at the normal U.S. corporate rate. The bill also would provide buyers of new vehicles assembled in the United States — including the Toledo-built Wrangler and more than 70 other cars, trucks, and sport utility vehicles — a $3,500 rebate.
The rebate would be given at the point of purchase, with the U.S. Treasury reimbursing the dealer. Congress would pay for that rebate with the extra revenue generated by the change in the tax code.
“It costs taxpayers nothing. It simply says, if you make this in the United States with American workers and it’s overwhelmingly union-made and good wages, it means you’re going to get a break,” he said. “If you make it overseas you’re not. It’s very simple.”
A longtime ally of union auto workers, Mr. Brown said the need for this legislation came into focus in late June when General Motors eliminated the second shift at its Lordstown, Ohio, car plant the same week that it announced the company would relaunch the Chevrolet Blazer sport utility vehicle from a plant in Mexico.
The Lordstown Complex, located about 15 miles west of Youngstown, builds the Chevrolet Cruze sedan. But the Cruze hasn’t been selling well as buyers shift away from sedans in favor of sport utility vehicles. Through June, U.S. sales of the Cruze were down more than 26 percent. General Motors hasn’t said much publicly about the long-term future of that plant.
In a statement, Mr. Brown’s opponent in the upcoming election for U.S. Senate, Republican Congressman Jim Renacci, hit Mr. Brown’s opposition to the Republican tax bill and said the proposal falls short on substance.
“It doesn't surprise me that career politician Sherrod Brown has released a proposal without any legislative text, that has not been scored by the Congressional Budget Office, and without any information on the potential cost to American taxpayers or the negative impact it could have on American jobs,” Mr. Renacci, who currently represents Ohio’s 16th Congressional District, said in a written statement to The Blade. “This is what career politicians always do — make a lot of big promises without substance.”
“That's because career politicians like Sherrod Brown only care about their next election instead of the next generation. As someone who was a businessman for three decades and an auto dealer right here in Ohio, I have a proven track record of creating jobs for Ohio workers. And I worked diligently to draft and pass the ‘Tax Cut and Jobs Act,’ which has helped so many Ohio workers and small businesses, while Sherrod Brown voted against the tax cuts and would repeal them if he had his choice.”
Mr. Brown said the rebate program would last for two years, or until funding ran out.
It’s not clear how much support Mr. Brown might receive on the proposal. As of now, there are no co-sponsors, and he acknowledges movement is unlikely before the November election.
“You build coalitions, you get people on board, and you start building public pressure,” he said. “This isn’t going to happen next week. It depends on the elections this year and depends on if Trump sees this is something that makes sense for him with the auto industry.”
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.