Say no to Bangalore and yes to Buffalo,' seems to be the latest mantra of United States President Barack Obama as he struggles to bring the ailing American economy back on track.
Meeting one of his major election promises, Obama on Monday the announced end of years of tax incentives to those US companies which create jobs overseas in places like Bangalore.
Instead, the incentives would now go to those creating jobs inside the US, in places like the Buffalo city -- bordering Canada in upstate New York.
"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," Obama said at White House announcing the international tax policy reform.
"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," Obama said.
According to Guardino, CEO of the Silicon Valley Leadership Group, Obama's language was "not only discouraging, but divisive".
According to 'The Wall Street Journal', the White House plan has three main elements affecting businesses. It would curb corporations' ability to park their overseas business earnings indefinitely outside the U.S. and avoid U.S. taxes, a practice known as deferral. The plan would change the legal treatment of many international subsidiaries that companies have used to shift earnings into low-tax offshore havens.
And it would put new limits on corporations' ability to use offshore subsidiaries to generate unjustified foreign-tax credits.
The new tax laws are expected to adversely affect countries like India, China and Philippines, where many US companies have been outsourcing their work.
However, Indian IT major Infosys is of the opinion that the new tax proposal has nothing to do with IT outsourcing done by US corporations.
"The current proposal, as we understand, is to close corporate tax loopholes on U.S. multinational corporations and crack down on their overseas tax havens. We do not believe that it has anything to do with IT outsourcing done by US corporations," Infosys said in a statement.
