American firms will no longer get any tax breaks if they move their jobs to India and elsewhere in the world as President Barack Obama has decided to “restore a sense of fairness” to the U.S. Tax Code. “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,” he said during his debut address to a joint session of the Congress on Tuesday.
1,000 firms will be hit
About 1,000 firms are expected to be affected by the move to do away with a particular provision of the country’s tax code that allows them to pay lower taxes for profits repatriated from foreign shores.
Among the major companies which have shipped jobs to foreign countries such as India are General Electric, Microsoft, Hewlitl-Packard, Pepsico, Motorola, Honeywell and IBM.
Earlier this month, two Senators had expressed concern over lobbying by multinational corporations to allow firms with offshore funds to move their money back to the U.S. at a discounted tax rate. “In 2005, over 300 billion dollars in offshore funds were brought back and were subject to a 5.25 per cent tax rate instead of the normal 35 per cent rate, which means Uncle Sam missed out on billions in needed tax revenues,” the Senators had said in a letter. They also added that “such tax holidays not only reduce U.S. tax revenue in the long run, but create new incentives for U.S. multinationals to send more jobs, funds and facilities offshore”. — PTI
Source: Hindu.com
Tags: Outsourcing, favour, loses
