Obama's tax plan could push up outsourcing cost 50%

[Pragadheesh]

American firms could see a 50% rise in the cost of outsourcing business processes to India if President Barack Obama's new tax
proposals are accepted. Even though outsourcing will still make business sense, industry watchers concede the move could act as a dampener.

Obama has proposed to tax expenditure by US companies on availing services from outside the country from 2011. The move has been proposed to discourage outsourcing and contain the flight of jobs to other countries.

He said the White House plan would save taxpayers USD 210 billion over the next decade. “It's a tax code that says you should pay lower taxes if you create a job in Bangalore, than if you create one in Buffalo, New York.”

Payments by US companies for services outsourced to India or other countries are treated as normal expenditure and deducted from the company's revenue at present. They are not required to pay tax on that amount.

Incentives would, instead, be given to those creating jobs and enhancing competitiveness in the US. The end of tax incentives for outsourcing would have a huge impact on the Indian economy, where US companies have been outsourcing their work.

further info:
http://timesofindia.indiatimes.com/B...ow/4488704.cms

http://www.moneycontrol.com/india/ne...nasscom/396182

[nix]

so??

he is not our president. he will only act in the interest of the US.

[dd_wingrider]

The "50%" figure is just outrageous and it will never ever come near that. And Obama is telling US people what they want to hear now in midst of all job cuts and recession. Plus this policy is not going to come into action overnight, there will be significant amount of time required to actually put into this place probably with lots of modifications.

That's why you don't see big companies like wipro infosys etc pressing panic buttons. And not to forget that even after this so called tax thing there will be profit involved in outsourcing. So, these stupids at TOI should have waited for sometime before coming with ridiculous figures.