Washington: American firms will no longer get any tax breaks if they move their jobs to India and elsewhere in the world as President Barack Obama has decided to “restore a sense of fairness” to the US Tax Code.
“... 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,” Obama said in his first address to the joint session of the US Congress.
About 1,000 American firms, which have moved their jobs abroad, are expected to be affected by the proposed move to do away with a particular provision of the country’s tax code that allows them to pay lower taxes for profits repatriated from foreign shores.
The opponents of the tax code, mostly comprising of Democrats, have been demanding to abolish this provision for a long time, saying it was encouraging the companies to ship jobs aboard and eliminate the local positions.
According to various estimates by economists, corporate tax code may account for up to 3 million jobs abroad.
Way back in 2004, the US Congress had allowed a one-year repatriation tax holiday which reduced the 35% tax rate on foreign earnings of American companies to just 5.25%.