Obama to end tax cuts for firms that outsource
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Obama to end tax cuts for firms that outsource

Thursday, 26 February 2009, 02:40 Hrs   |    6 Comments
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Obama to end tax cuts for firms that outsource
Washington: In a message that may not be music to Indian outsourcing firms, U.S. 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 U.S. Congress 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, whose outline he would present Thursday, the move may hurt India's BPO sector as without the tax breaks, U.S. 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."

Recalling that at a fiscal summit Monday he had pledged to cut America's deficit in half by the end of his first term in office, he said: "My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programmes."

"In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest two percent of Americans," he added.

Noting that his recovery plan provides a tax cut for 95 percent of working families, Obama said to preserve America's long-term fiscal health, "we must also address the growing cost in medicare and social security".

"Comprehensive health care reform is the best way to strengthen medicare for years to come, and we must also begin a conversation on how to do the same for social security, while creating tax-free universal savings accounts for all Americans," Obama said.

"Finally, because we're also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget," he said announcing that for the first time the budget will reflect the full cost of fighting the war in Iraq and Afghanistan.

"For seven years, we've been a nation at war. No longer will we hide its price," Obama said.
Source: IANS
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Reader's comments(6)
1: Tax cuts plus maximum outsourcing is the ONLY WAY out to bring back the US economy on its normal course. Ending tax breaks for firms that outsource jobs will only add to the existing economic burden of the companies. If Obama were really a Harvard alumni, this is just common sense.
Posted by:Mohan - 26 Feb, 2009
2:
What if the profit earn through the Outsourcing is greater than the tax levied on the American Inc. I Still feel that the companies will go ahead with the Outsourcing.. there are other Economic factors too that tends American Inc to outsource the job like Cheap Labor, Expensive Higher Education at US that common US citizen can't afford, Tax itself is another factor that tends American Inc for outsourcing.Has Mr. Obama ever thought of the Ripple effect on the World Economy or it just another US interest
john Replied to: Mohan - 26 Feb, 2009
3: All said and done, these options are really not going to drive the economy back to where it stood for a long time to come. The US needs to turn to getting their people into agricultural development, focus on the process of "food for thought", get there people to have jobs for a living and reaffirm them that if they dont work hard, they cannot get a decent living. If not they will keep on infusing funds through various packages and the net result will be the same. To undo the damage already done people should realize that first to live you need to have a decent meal and secondly you need a drive to survive. All the people who have lost there jobs for a long time and the onces who are still loosing jobs now should be offered incentives to get the vast lands that are available fertile and cut down on the huge Agri imports of the US. The minute US can produce low food products the fasterwill be there recovery.

Posted by:Vinod B - 25 Feb, 2009
4: All said and done these options are really not going to really drive the economy back to where it stood for a long time to come. The US needs to turn to getting their people to get into agricultural development, focus on the process of "food for thought", get there people to have jobs for a living and reaffirm them that if they dont work hard they cannot get a decent living. If not they will keep on infusing funds through various packages and the nt result will be the same. Do undo the damage already done people should realize that first off all you need is decent meal to live and secondly you need a drive to survive. All the people who have lost there jobs for a long time and the onces who are still loosing now should be offered incentives to get the vast lands fertile and cut down on the huge Agri imports of the US. The minute US can produce low food products the fasterwill be there recovery.
Posted by:Vinod Balakrishna Reddy - 25 Feb, 2009
5: that is true. this will affect the american companies, companies that bring work into the country (US) that is all foriegn companies would be getting tax breaks. This move may infact start a shift of US companies moving out of the US. "This has been anticipated".
Posted by:sean - 25 Feb, 2009
6: It will not affect Indian companies and instead will affect the competitiveness of the US companies and will be helpful for India.
Posted by:Gahan - 25 Feb, 2009
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