Nearshore Americas

Yet Another Proposed Bill to Penalize Companies Who Outsource


Last month, I wrote about the American Jobs and Closing Tax Loopholes Act (H.R. 4213), which among many other things has provisions aimed at closing tax loopholes for companies that ship jobs overseas (you can read that blog here).

As it stands, H.R. 4213 has been blocked via filibuster by the Republican Party. The current version of the bill was trimmed back by nearly 50 percent, according to reports. Meanwhile, some congressmen are pushing forward in their efforts to curb outsourcing.

On June 29, Representative Tim Bishop (D-NY), along with House colleagues Jerry McNerney (D-CA), and Gary Peters (D-MI), introduced the Stop Outsourcing and Create American Jobs Act of 2010 (H.R. 5622). The congressmen say the bill is designed to deter corporations from using tax havens to hide assets and create jobs overseas by increasing civil and criminal penalties for illegal transactions involving a tax haven country, such as fraud, false claims, and tax evasion.

In a prepared statement, Bishop said “Rewarding good corporate citizens who create American jobs will ensure the economic recovery reaches Main Street,” adding that the bill will increase federal revenues by targeting tax evaders and countries that help them cheat. Any revenues generated by the bill will be applied to reducing the federal deficit

In announcing the bill, Bishop referred to a late 2008 study conducted by the Government Accountability Office (GAO) which estimated 83 out of the 100 biggest public corporations have subsidiaries in tax haven countries or similar jurisdictions, and Bishop said these subsidiaries are often created to take advantage of foreign tax structures and replace American jobs with cheap labor.

The bill really puts pressure on companies that want to work on government contracts. Any federal agency would be allowed to request information about a corporation’s outsourcing practices when it applies for government contracts. The bill also would enable agencies to give preference to companies that have not outsourced jobs in the last year.

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“We should be rewarding companies that invest in America and discouraging companies that contract with the government from shipping jobs overseas,” Bishop said in his statement.

I’ll keep watching for legislative developments. And let me know your thoughts on just how involved the government should be. For years, many in the IT and technology industries shunned government involvement, but perhaps the tides are turning?

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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