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Would Obama's tax code curb offshoring?

There's plenty of debate these days over how to keep U.S. jobs onshore and not exported to other countries where the labor is cheaper and the deals are better, especially in technology. This week, President Obama unveiled tax code changes that he wants to make to clamp down on U.S. companies with offshore locations. And he said his plan could curb the offshoring that has drained jobs from the United States.

In his remarks, Obama pointed to Bangalore, a major Indian IT outsourcing center. The United States has developed "a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.," Obama said.

Obama's proposed tax changes must be approved by Congress, and it could be a long, tough fight to pass the legislation. There are just as many parties interested in keeping jobs in the United States as there are those that want them sent to cheaper labor markets.

The proposal would affect IT vendors that run subsidiaries overseas by denying deductions on things like payroll taxes, Alan Appel, a tax attorney at Bryan Cave LLP in New York, told ComputerWorld. "By denying the deduction, the hope is that it will be more expensive to operate offshore and it will give incentives to create jobs in the U.S," Cave said.

For more on Obama's proposed tax changes:
- check out this ComputerWorld.com article

Related Article:
H-1B visa demand heads south--like the economy
IBM will snag half of India's outsourcing work by 2010
Outsourcing heads to South America
Financial sector strain means more offshoring

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Comments

It sounds to me, that curbing offshoring in other countries, was a comment that was made without a construct or objectives. In each planning stage leaders have found some methods to be ineffective.

For instance President Obama, understands that the Americas is the module for Nations to marvel and observe. The reason for the evalutions of how America perseveres is because of its bipartisan ship and democratic values. Information techonology and or data bases is the mega cream for any business. Bangalore India, has found aqueducts and has create a needed change for his or her region.

However, Obama had to recollect, that in reality, full employment and part time employment not only develops the gross national product or service, but it reduces maladaptive behavior. The new technology also increases the moral in the region of Bangalor India.

The country India in the Region of Bangalore has his or her citizens participating in full employment /part time employment to assist in change. The change creates an improved enriched lifestyle for his or her families.
On the other hand the owners of these work facilities obtain a tax credit. Just like in slavery days, people were considered 3/5 of a person. The analogy sound exploitive and cruel but it has legitmacy.
Anyway, the debate is over should American entrepeneurs obtain a tax curb for off shoring?

1. the socio economic package for Bangalor is scant. The wages are not sufficient for todays economy.
2.this tax opportunity probably resembles the tax statement of the 1040ez.
3.How is it possible to maintain a balance, when some expect reparations from other countries.
Especially, if outsourcing is an instument?
what I am asking for, is gudance, to understand what is the wrong? Is it politics, finance, databases, religion, healthcare, gerrymandering,outsourcing. Can someone coin, the nature of the problem? What is the answer?
How survive in a positive fashion globally?

"Son of the Soil" Protectionism coming from the mouth of one of the most developed capital nations in the world is ridiculously hypocratic. Protectionism might gain Obama the support of the nation, but this is no longer the 19th century. The world and its nations have made far and wide strides to establish a global marketplace and economy driven by the developed nations.
Now crying out like a child who is sure of losing won't benefit US with its protectionist stand. Its high time to realise that the world is not just the US - but many developed and developing nations who now wield power in the realms of economy, business, qualified and efficient workforce etc.
The recession should be utilised as an opportunity to fine tune the american workforce, its business models, adaptability and outlook to match competition from Bangalore, India or Shanghai, China.
It would be interesting to note that the EU has actually increased their outsourcing efforts to outride the recession.

How can you call this protectionism, when there is an "incentive" to move offshore? It makes more sense to level the playing field economically, and make the decision to consider international resources, due to a choice of expertise, rather than economics?

Dear Anonymous (above),
Your statement that "The recession should be utilised as an opportunity to fine tune the american workforce, its business models, adaptability and outlook to match competition from Bangalore, India or Shanghai, China" sounds like an egalitarian concept. However, here in the U.S. the working class pays taxes, medical insurance and social security so that it's citizens can be taken care of. The cost of outsourcing to India and China would be substantially higher if these countries took care of their people. The way it stands now, for every American job that is outsourced, the tax payers in the U.S. have to pay more (for the unemployed person who has been displaced), but the American corporations have to pay less. How is this fair?
kj in Fairfield, CT

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