Obama determined to end tax breaks to firms investing in overseas jobs

Close on the heels of Ohio banning outsourcing work to offshore locations, the US President Barack Obama has on Thursday emphasized on his resolve to plug the tax loopholes that support inducements for outlays in jobs in a foreign country. An online report quotes Obama as saying that he would offer a liberal tax credit to firms that generate more employments in the United States.

While speculations are rife that outsourcing may turn out to be a burning issue during the November polls, Obama has underlined that the tax benefits ought to be provided to companies generating jobs in the US and not abroad. Addressing a gathering it Cleveland in Ohio, Obama said that encouraging firms to make additional investments in the US is one of the basics to generating more jobs. At the same time, he pointed out that for several years, the tax code in the US has actually provided tax breaks worth billions of dollars to companies that generate jobs as well as make profits overseas.

Stating that he had resolved to alter this practice, the US President said that rather than tax loopholes that that encourage investments in creating jobs abroad, he was recommending a more liberal and enduring provision for tax credit that will ensure that it is offered only to companies that are engaged in research as well as innovation in the US itself. Referring to the difference in vision between the Democrats and Republicans, Obama said that they always have been in favor of the tax benefits should only be availed by companies creating employment opportunities in the United States and not in foreign lands. According to him, the November elections would be all about discouraging outsourcing and generating more jobs in America.

It may be noted here that the Ohio governor Ted Strickland of Democratic Party, who has been all along pursuing the Indian firms, has passed an executive order banning outsourcing of all government jobs overseas. Strickland, who is trailing in opinion polls, is now of the view that outsourcing not only weakened the economic development, but also results in undesirable business concerns. Soon after passing the executive order last week, Strickland issued a statement saying that outsourcing jobs was against the values of the people of Ohio.

Meanwhile, the move by the Ohio governor has evoked strong reactions from among the Indian IT firms, who described is as anti-trade. In fact, about 60 per cent of the revenue from their exports to the US and they see the recent move as well as the US federal government’s earlier decision to abruptly hike the H1-B and L1 visa fees as ‘discriminatory’. Incidentally, both the moves come just before President Obama’s scheduled maiden visit to India this November.