James R. Repetti (Boston College; Google Scholar), International Tax Policy's Harm to Manufacturing and National Interests, 2023 Wis. L. Rev. __ :

Two tax regulations that permit U.S. multinational enterprises (MNEs) to use foreign contract manufacturers and to disregard their wholly owned foreign subsidiaries have created significant tax incentives for MNEs to move manufacturing outside the U.S. These tax incentives have contributed to the loss of 5 million manufacturing jobs and the closure of more than 91,000 plants since 1997. 

The job losses increased racial and economic inequality and stressed our political system. Moreover, tax incentives to use foreign contract manufacturers continue to cause harm. Offshore manufacturing increases U.S. exposure to supply chain disruptions, threatens U.S. national security, and decreases research and development efforts to improve production techniques. Also, as automated manufacturing increases, the use of offshore manufacturing hinders the ability of the U.S. to compete in that sector.

This article proposes two amendments to the regulations to reduce or eliminate the tax incentives for offshoring. First, MNEs should not be allowed to use foreign contract manufacturers to qualify for the manufacturing exception in subpart F. Second, MNEs should not be permitted to disregard their wholly owned foreign entities. Under the Chevron doctrine, both proposals would clearly be valid. The Supreme Court’s nascent major question doctrine (“MQD”), however, creates significant uncertainty about the circumstances in which Chevron deference should apply. This article concludes that even if the MQD applies to eliminate Chevron deference, the so-called “weak form” of the MQD should validate the proposed regulations.