The US Senate will this week consider legislation designed to spur US companies to hire workers in America rather than overseas, making it one of the last items on the congressional agenda before the November midterm elections.

The centrepiece of the bill – sponsored by senior Democrats including Dick Durbin of Illinois and Chuck Schumer of New York – is a provision offering exemption from payroll taxes to any company shifting overseas jobs back to the US.

It also contains two tax provisions that could have a big impact on large multinational companies that are moving production overseas, as it would prevent the deferral of taxes on income earned abroad and the deduction of costs related to US plant closures in certain circumstances.

Although Democratic aides expressed hope that the bill might clear the first procedural vote on Tuesday, Republican opposition appears sturdy.

In a speech on Friday, Mitch McConnell, Senate Republican leader, said: “The majority has wasted months in this chamber trying to tell the private sector what to do instead of providing certainty to help them make investment decisions. This bill will do nothing to create jobs in the US.”

Some business lobby groups have also chimed in against the proposed legislation – which would cost the US government $721m over 10 years, according to the Joint Committee on Taxation. The National Association of Manufacturers took specific aim at the provision on the deferral of taxes on foreign income, saying it would “place US affiliates at a cost disadvantage vis-à-vis their foreign-based competitors”, according to Dorothy Coleman, the group’s vice-president for tax and economic policy.

But supporters of the legislation claimed it would help tackle America’s high unemployment rate, particularly in areas that had lost large numbers of manufacturing jobs. “This bill takes the carrot-and-stick approach to companies that ship jobs overseas,” said Sherrod Brown, a Democratic senator from Ohio.

The US Treasury department did not reply to a request for comment on the bill. However, in his weekly address on Saturday, Barack Obama, US president, said Republican House leader John Boehner had “stood up for outsourcing, instead of American workers”.