Oversea Outsourcing is Hurting the U.S. Tax Base

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Oversea Outsourcing Hurting the U.S. Tax Base
Editorial by Gerod Wattier

Federal and State Governments should pass laws banning foreign outsourcing of government work. Government should also pass tax laws that take away incentives for private companies to outsource jobs overseas. Outsourcing of work overseas is a double whammy to the taxpaying public. If the work was performed in America the employed person would be paying U.S. taxes and through the job multiplier affect would help support other jobs that would also contribute to the tax base. When the job is sent overseas all that tax revenue is lost. In addition to the lost tax revenue governments now have to pay unemployment benefits to jobless workers. The lost tax revenue and increased unemployment expenses negatively affect government's ability to fund education and other services for its citizens.

The U.S. Government could change this dramatically by changing the Income Tax code. If a company's U.S. employees make up 70% of its cost base you exclude 70% of its income from U.S. income tax. If a company's U.S. employees only make up 20% of its cost base it pays income tax on 80% of its income. This change would help make it economically unattractive to send jobs overseas. It could be quickly implemented and could be very effective in stopping our loss of jobs overseas.

Gerod Wattier
gwattier@aol.com

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