In a message that may not be music to Indian outsourcing firms, US president Barack Obama has served notice that he would end the tax breaks for corporations that ship jobs abroad.
Giving his first speech to a joint session of the US Congress on Tuesday, Obama said: “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
If Obama follows through with the announcement in the budget, the move may hurt India’s BPO sector as without the tax breaks, US companies may find it less attractive to outsource jobs to India.
After passing a $787 billion stimulus plan free of earmarks, or pet projects introduced by lawmakers in any legislation, Obama told the Congress: “I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.”
“My administration has begun to go through the federal budget in order to eliminate wasteful and ineffective programmes... we will also end the tax breaks for the wealthiest 2% of Americans.”
Noting that he aims to give a tax cut for 95% working families, Obama said to maintain fiscal health, “we must address growing costs in medicare and social security”.