Obama’s new tax rules and employment restrictions will drive away skilled Indian professionals and harm American businesses, argues Sanjay Kamlani
US President Barack Obama’s decision last year to tax the foreign subsidiary earnings of American companies is a combination of political finesse and economic incompetence. These proposals, coupled with new employment restrictions and increased visa fees for professional immigrants, are likely to slash American jobs and shrink US GDP. The US economy will inevitably contract as India’s talented workforce withdraws and returns to its homeland.
The traditional tax treatment of US companies and their foreign subsidiaries, long before talks on Obama’s proposals started, had already put American companies at a competitive disadvantage vis-à-vis their non-American peers by imposing additional US taxes on foreign subsidiary income, unlike most other countries. Many countries tax companies only on income earned in their home country and offer tax exemptions on earnings of these entities’ foreign subsidiaries.
The US, on the other hand, imposes additional income tax on the foreign subsidiaries of US companies. A European company would not be taxed in its home country for earnings generated by its foreign subsidiary enjoying a tax holiday in India. In contrast, a US parent company in the same situation could be taxed at the rate of 35% on those earnings, making the benefit of Indian tax holidays worthless.
You must be a
subscribersubscribersubscribersubscriber
to read this content, please
subscribesubscribesubscribesubscribe
today.
For group subscribers, please click here to access.
Interested in group subscription? Please contact us.
你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章，欢迎成为我们的订阅会员成为我们的订阅会员。
Sanjay Kamlani is the co-CEO of Pangea3.
