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http://money.cnn.com/2010/09/27/news/economy/anti_offshoring_tax_bill/index.htm?section=money_mostpopular&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+rss/money_mostpopular+(Most+Popular)


Democrats' tax bill targets outsourced jobs
By Ben Rooney, staff reporterSeptember 27, 2010: 8:01 AM ET


NEW YORK (CNNMoney.com) -- Senate Democrats this week will push legislation they say will create jobs and discourage companies from shipping jobs overseas.

The bill, introduced last week by Sen. Dick Durbin of Illinois, would give companies a break on payroll taxes for new U.S. jobs that replace positions that had been based overseas. It would also rein in tax incentives for moving jobs outside the United States.

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Durbin and other Democrats plan to bring the bill up for a vote Tuesday, but the legislation has already come under attack from Republicans and business groups. (A busy year-end tax agenda for Congress.)

The U.S. Chamber of Commerce called on lawmakers to oppose the bill, saying it would hurt the economy and lead to job cuts. Instead, the group urged lawmakers to extend all of the Bush tax cuts set to expire on Dec. 31 -- an issue Congress is unlikely to resolve until after congressional elections on Nov. 2.

The debate over outsourcing comes as Congress is under pressure to stimulate jobs, with the nation's unemployment rate holding near 10%.

But tax policy analysts say the bill is politically-motivated and doubt that it will have a meaningful impact on hiring. (Risk of double-dip recession: Unlikely but rising.)

"I don't think this package is going to be successful," said Anne Mathias, a tax analyst at Concept Capital's Washington Research Group. "Politically it makes sense, but economically I'm not sure it will work."

Tax holiday: The Creating American Jobs and Ending Offshoring Act would give U.S. employers a two-year break from payroll taxes on wages paid to new U.S. workers performing services in the United States, according to a summary of the legislation.


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To be eligible, businesses would have to certify that the U.S. employee is replacing an employee who had been performing similar duties overseas.

The goal is to encourage multinationals to hire American workers for jobs that would have otherwise been outsourced to countries with lower labor costs.

Experts said the amount of money companies could save as a result of the tax holiday may not be enough to offset the benefit hiring workers in cheaper labor markets.

In addition, analysts said many questions remain about how the provision would work if the bill is passed.

"How do you identify the jobs that have come home?" asked Roberton Williams, senior fellow at the Tax Policy Center. "How does the firm prove that a job has moved from overseas to home? How do they prove that the job wouldn't have been created here anyway?"

Closing loopholes: In addition to creating incentives for employers to create U.S. jobs, the bill aims to discourage companies that ship jobs abroad by eliminating certain favorable tax rates.

Under the legislation, businesses would be blocked from taking any deduction, loss or credit for costs related to reducing or ending U.S. operations while expanding similar operations outside of the United States.

The bill would also change current tax laws that allow companies to defer paying U.S. tax on income earned overseas until the profits are brought back to the United States.

Supporters of the bill say deferral gives multinationals an incentive to move production overseas and puts domestic companies at a disadvantage.

But critics, like the Chamber of Commerce, say ending deferral would subject American companies to "double taxation" on the earnings of their foreign subsidies.

"Limiting deferral would hinder the global competitiveness of these American companies, impede U.S. economic growth, and ultimately result in the loss of jobs," Bruce Josten, an executive vice president at the Chamber, wrote in a letter to Senators last week.
 

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That's some title you have there, where does it say anything about Republicans in that article? Are you just incorrectly assuming that the US Chamber of Commerce is made up of only Republicans?

A January 2010 public opinion survey conducted by Harris Interactive found that Americans rank the U.S. Chamber of Commerce among the top five best-known and respected organizations in Washington

Perhaps if you had a job you wouldn't always look down on those who provide jobs.
 

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Outsourcing is much more than just companies deciding to dump jobs. It's the result of of the new world-wide market for goods, services AND jobs. While I wish the U.S. could be immune from the effects of this market, we aren't. We have the most expensive workforce in the world. The result is that companies who are in a competitive deathmatch will inevitably have to look to their workforce for savings. You can't make flat panel TV's that cost $5000 if your competitors sell an equivalent TV for $2500. If someone with a non-biased view would tell me how we keep every job here, I would love to see the plan. Remember, our market isn't just the U.S. - it's the entire world, so we have to compete with the entire world. Simply putting tax penalties on outsourcing does nothing but reduce our national competitiveness. What is a rational way out of this? There is no good short-term answer. The answer in the long term is to make a well planned shift in our workforce to jobs that no one else can do as well as we can.
 

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Eh, forget it....
 

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Here's another angle...
The only companies that can afford to outsource are large companies.
Small businesses are local by nature. They can't outsource. Why not make it so small businesses have a better chance of survival by lessening regulations and taxes on them and making it more expensive and punative to outsource in the first place?

One example of large companies dong what they do to maximize profits is the current move of Google, Microsoft, Adobe, etc. also several large manufacturing companies have left California while seeking to expand, and have built new facilites for expansion in Utah. The current state corporate tax is 10% in Cali and they've reduced it from 7% to 5% in Utah. That has netted Utah over 40,000 new jobs that California has lost.

So, California has sought to increase it's tax revenues by increasing it's tax rate to 10% and it lost 40k new jobs that Utah has just created by running a tax revenue half that of California.

That's the free market at work, and that's a perfect example of how lower taxes leads to more jobs and greater tax revenue.

Novel.
 

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Here's another angle...
The only companies that can afford to outsource are large companies.
Small businesses are local by nature. They can't outsource. Why not make it so small businesses have a better chance of survival by lessening regulations and taxes on them and making it more expensive and punative to outsource in the first place?

One example of large companies dong what they do to maximize profits is the current move of Google, Microsoft, Adobe, etc. also several large manufacturing companies have left California while seeking to expand, and have built new facilites for expansion in Utah. The current state corporate tax is 10% in Cali and they've reduced it from 7% to 5% in Utah. That has netted Utah over 40,000 new jobs that California has lost.

So, California has sought to increase it's tax revenues by increasing it's tax rate to 10% and it lost 40k new jobs that Utah has just created by running a tax revenue half that of California.

That's the free market at work, and that's a perfect example of how lower taxes leads to more jobs and greater tax revenue.

Novel.
I agree. Texas figured this out a long time ago and has enjoyed relatively good prosperity as a result of the constant stream of corps moving from California and the Northeast. They are trying to tax their way to prosperity, and it never works as long as people can find an alternative.
As for the small business part, they are usually small because they are somewhat local. Most businesses that do heavy international business are not small by nature. I just don't know what you can do from a gov't standpoint to discourage outsourcing without hurting our net trade balance. Higher payroll costs will result in higher product costs which will result in fewer overseas sales which negatively affects our trade balance. It's a no-win deal.
 

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Discussion Starter #11
The answer in the long term is to make a well planned shift in our workforce to jobs that no one else can do as well as we can.
Again...


You cant college educate every man and woman in the United States and have them end up with good paying job.

We already have millions of college educated unemployed, not counting new grads that could not find jobs since 2007.
 

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Again...


You cant college educate every man and woman in the United States and have them end up with good paying job.

We already have millions of college educated unemployed, not counting new grads that could not find jobs since 2007.
And whose fault is that? College education has become a joke through government funded loans making it so everyone can have access doesn't do much for excellence, it's just 'levels the playing field'.

THe government just took over the student load industry 'to insure that every young person has the opportuninty to get a college education.' From Obama's mouth to my keyboard...

Also, the BA's being issued for course studies usually have little import to society in general. How is a BA in social sciences or a liberal arts degree going to help you in a technological leaning economy?
 

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Discussion Starter #13
Also, the BA's being issued for course studies usually have little import to society in general. How is a BA in social sciences or a liberal arts degree going to help you in a technological leaning economy?
It's not really about that.

You have IT jobs, ME jobs, CPA jobs, ect.... getting sent overseas.
Quality is not the problem.
It never was.
 

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It's not really about that.

You have IT jobs, ME jobs, CPA jobs, ect.... getting sent overseas.
Quality is not the problem.
It never was.
Ummm.... yes it is.
The last company I worked for, a large software company, had all those positions you listed above. The only jobs that went overseas, yes, they outsourced to a team of engineers in India', were html and javascript web page designs.

They were responsible for the website of the company I worked for. The real software was written in-house by a team headed by the CTO with a Masters in Math from Perdue.

I worked on a team of developers that wrote some pretty mind-bending stuff that had no way of becoming reality if outsourced. However the average slary for the team was between $60-$70 per hour. The outsourced engineers got $10 per hour.

The downside to this outsourcing was that there were terrible performance and bug issues, coupled with a lack of understanding what the problems were that needed to be solved. We ended up having to take 2 of the dev team engineers and put them on quality control of the India team. It raised our costs substantially.

Our company consumed the largest bandwidth of any company in NYC. There was no way we could have outsourced our IT We had a 4 man team in IT and they were rarely seen at HQ except for general planning meetings. They were always at the data center.

The job load is going to center where it's the most efficient to perform. There is no blanket policy or regulation that will address each individual issue. The only way for outsourcing to change is to make is unattractive for companies to do it.

We're not in the industrial revolution anymore, we're on the exiting trend of the information revolution and transitioning into the age of information. We need to make it possible for companies to profit from that here in the US so they hire more American workers.
 

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Again...


You cant college educate every man and woman in the United States and have them end up with good paying job.

We already have millions of college educated unemployed, not counting new grads that could not find jobs since 2007.
I didn't mention college in my post. I am the first to think more education is good for anyone. But I understand that college is not for everyone and that every good job doesn't require a college education. All I'm saying is that I have read articles that point to the kinds of jobs that we excel at. Many require degrees, and many require technical training mixed with On the Job Training. Example: You can't send the drilling of gas wells in Texas to overseas workers. It's hard, dirty work, and it requires significant skill, and pays well. How many schools train oil/gas rig workers? Not many. Most stumble onto a low-paying, low-skill job on the site and work their way up. There are thousands of jobs like this that need skill and can't be outsourced. We need to develop those jobs. On the other hand, while we excel at heavy industry, so does every other moderately advanced country on earth. We can't compete with their low-cost labor, so we need to focus elsewhere. We need some serious thinking about how to get our young people trained for jobs that are difficult to outsource. But like I said, that doesn't help a lot in the short run, and there are no easy solutions to the short-term problem - especially for workers too old to retrain.
 

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Ummm.... yes it is.
The last company I worked for, a large software company, had all those positions you listed above. The only jobs that went overseas, yes, they outsourced to a team of engineers in India', were html and javascript web page designs.

They were responsible for the website of the company I worked for. The real software was written in-house by a team headed by the CTO with a Masters in Math from Perdue.

I worked on a team of developers that wrote some pretty mind-bending stuff that had no way of becoming reality if outsourced. However the average slary for the team was between $60-$70 per hour. The outsourced engineers got $10 per hour.

The downside to this outsourcing was that there were terrible performance and bug issues, coupled with a lack of understanding what the problems were that needed to be solved. We ended up having to take 2 of the dev team engineers and put them on quality control of the India team. It raised our costs substantially.

Our company consumed the largest bandwidth of any company in NYC. There was no way we could have outsourced our IT We had a 4 man team in IT and they were rarely seen at HQ except for general planning meetings. They were always at the data center.

The job load is going to center where it's the most efficient to perform. There is no blanket policy or regulation that will address each individual issue. The only way for outsourcing to change is to make is unattractive for companies to do it.

We're not in the industrial revolution anymore, we're on the exiting trend of the information revolution and transitioning into the age of information. We need to make it possible for companies to profit from that here in the US so they hire more American workers.
But since money is the bottom line....IT jobs continue to get sent overseas, as do other software and game creation jobs.
India, Poland, Russia, China, ect....
 

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But since money is the bottom line....IT jobs continue to get sent overseas, as do other software and game creation jobs.
India, Poland, Russia, China, ect....
This is an unavoidable fact. Software development can and will be outsourced. But you can't outsource hardware installation and maintenance. It's a matter for smart young people to think about when choosing a career. Almost anything medical cannot be outsourced except for one thing - doctors. Anything requring direct patient care is a good career. But diagnostic work can be done from anywhere. So doctors heavily involved in diagnostic work might find their workload reduced over time. Every niche of the job market has areas that can be outsourced and areas that can't. It's a simple fact we cannot change, so we had better learn to work with it and be smart about it.
 
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