The Hindu : Front Page : Obama ends tax sops to outsourcing firms

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Wednesday, May 06, 2009
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Obama ends tax sops to outsourcing firms

Washington: “Say no to Bangalore and yes to Buffalo,’ seems to be the latest mantra of U.S. President Barack Obama as he struggles to bring the ailing American economy back on track.

Keeping one of his major election promises, Mr. Obama on Monday announced an end to years of tax incentives to those U.S. companies which create jobs overseas in places like Bangalore. Instead, the incentives would now go to those creating jobs inside the U.S., in places such as Buffalo city, bordering Canada in upstate New York.

“We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits,” Mr. Obama said, announcing the international tax policy reform. “We will use the savings to give tax cuts to companies that are investing in research and development here at home so that we can jump- start job creation, foster innovation, and enhance America’s competitiveness,” he said.

The new laws are expected to hit India, China and the Philippines, where U.S. companies have been outsourcing their work.

Hitting hard at the current taxation system, Mr. Obama said: “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” — PTI

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