House Passed Bill Which Closes the “Offshore Outsourcing” International Corporate Tax Scheme
In the American Workers, State, and Business Relief Act of 2010, passed by the House last Friday, there are little observed provisions to remove tax incentives to offshore outsource your job.
The bill ties income to the foreign tax credit, so no longer can a corporation claim the tax credits yet park the actual profits money offshore in a low tax country. As one can see if one gets credits yet doesn’t have to actually pay tax on profits accrued when offshore, this encourages the movement of assets, production overseas, including jobs.
In White House Semi-English:
When a U.S. taxpayer has overseas income, taxes paid to the foreign jurisdiction can generally be credited against U.S. tax liabilities. In general, this “foreign tax credit” is available only for taxes paid on income that is taxable in the U.S. The intended result is that U.S. taxpayers with overseas income should pay no more tax on their U.S. taxable income than they would if it was all from U.S. sources. However, current rules and tax planning strategies make it possible to claim foreign tax credits for taxes paid on foreign income that is not subject to current U.S. tax. As a result, companies are able to use such credits to pay less tax on their U.S. taxable income than they would if it was all from U.S. sources – providing them with a competitive advantage over companies that invest in the United States.
In reading the bill, first pass, it does appear the White House proposal is in the bill.
The changes are is TITLE IV—REVENUE OFFSETS, Subtitle A—Foreign Provisions in H.R. 4213. The section starts on page 229 in the bill text link.
Multinational corporations will do everything in their power to strip out these changes and so will the powerful NASSCOM, or Indian offshore outsourcing business group and their U.S. lobbying counterpart, USINPAC.
Expect war from our Benedict Arnold Tech Companies such as IBM, Microsoft and HP. IBM literally has an algorithm to manipulate global tax structures and has been firing every American who isn’t nailed to their desk. HP just announced 9000 more layoffs. Amazing because the bill extended the R&D tax credit, which greatly benefits these same companies.
Meanwhile Chuck Schumer wants to tax foreign call centers. For each call transferred overseas, Schumer wants a 25¢ charge put on the call. What? No more nonsensical useless script reading rambling in your ear wasting your time and creating more frustration via the phone? Say it ain’t so!