*Bangalore to Buffalo*
As promised in his campaign, U.S. President Obama has initiated steps
to make it tough for U.S. companies that create jobs in Bangalore, in his
attempt to bring back the ailing US economy on track and the clouds seem to
be getting darker for Indian IT companies.
According to the Obama Administration, U.S. multinational companies
earned $700 billion in foreign earnings in 2004, but paid just 2.3 per cent
in taxes on that income.
Yesterday, Obama set the ball rolling for reforming the U.S. tax code
that currently rewards companies for shipping jobs offshore or transferring
profits to overseas tax havens.
"[M]ost Americans meet their responsibilities because they understand that
it’s an obligation of citizenship, necessary to pay the costs of our common
defense and our mutual well-being.
"And yet, even as most American citizens and businesses meet these
responsibilities, there are others who are shirking theirs. And many are
aided and abetted by a broken tax system, written by well-connected
lobbyists on behalf of well-heeled interests and individuals. It’s a tax
code full of corporate loopholes that makes it perfectly legal for companies
to avoid paying their fair share….*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.*
"….I’m announcing a set of proposals to crack down on illegal overseas tax
evasion, close loopholes, and make it more profitable for companies to
create jobs here in the United States.
For years, we’ve talked about ending tax breaks for companies that ship jobs
overseas and giving tax breaks to companies that create jobs here in
America. That’s what our budget will finally do. 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. And 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."
- *President Barack Obama* at the *White House, May 4, 2009*
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