Deny Companies Expense Deductions for Offshoring Jobs and Credit Expenses for Onshoring. >President Biden’s reform proposal will also make sure that companies can no longer write off expenses that come from offshoring jobs. This is a matter of fairness. U.S. taxpayers shouldn’t subsidize companies shipping jobs abroad. Instead, President Biden is also proposing to provide a tax credit to support onshoring jobs.
It sounds great in theory, but how will this work in practice?
OP: "This must be an idea by someone that doesn't understand how businesses work. Dollars are fungible and mobile. Businesses do not pay taxes. Businesses just pass the cost of taxes along to the consumers of their products and services. Take away the deduction and companies will either raise prices or decrease expenses elsewhere (like hiring more USA people) to make up the difference."
Not true. Businesses not competitive with other companies in their sector can't just pass on the cost of taxes. They have to stay competitive, whatever that takes.
They will just hire more consulting companies that are based in the US that then offshore. Really it’s not difficult to get around any of this. Plus Biden just lifted all the H1 visa caps. They will soon be coming here in droves.
Instead of offshoring, AT&T should go with a virtual assistant. AI doing excellent customer support.
"no longer write off expenses that come from offshoring jobs"
This must be an idea by someone that doesn't understand how businesses work. Dollars are fungible and mobile. Businesses do not pay taxes. Businesses just pass the cost of taxes along to the consumers of their products and services. Take away the deduction and companies will either raise prices or decrease expenses elsewhere (like hiring more USA people) to make up the difference.
@jnd, offshoring is not that cheap. It is just an accounting game to shuffle the cost from one place to other, create some virtual cost-saving which hardly shows up in the real financial results, achieve promotion by trumpeting this virtual optimisation.
It won't work, because T saves far more in certain cases to send jobs offshore than this tax hit would cost them to keep jobs here. Plus T accountants and attorneys and tax dept will find ways to outrun the full tax hits anyway. When you can hire 3 to 5 headcount offshore at the same price of 1 fully loaded cost US headcount, you really think a small potential tax slap on wrist is going to stop T from doing just that?
It's going to cost us jobs. Money saved by offshoring unimportant work allows the company to use the money to create USA jobs.