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| Economy |
| Ballmer Says Tax Would Move Microsoft Jobs Offshore |
| 2009-06-05 |
| June 3 (Bloomberg) -- Microsoft Corp. Chief Executive Officer Steven Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits. “It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.” Obama on May 4 proposed outlawing or restricting about $190 billion in tax breaks for offshore companies over the next decade. Such business groups as the National Foreign Trade Council, the U.S. Chamber of Commerce and the Business Roundtable have denounced the proposed overhaul. U.S. tax rules let companies defer paying corporate rates as high as 35 percent on most types of foreign profits as long as that money remains invested overseas. Obama says he wants to end such incentives to keep foreign profits tax-deferred so that companies would invest them in the U.S. Microsoft reported an overall effective tax rate of 26 percent for 2008 in its last annual report. “Our effective tax rates are less than the statutory tax rate due to foreign earnings taxed at lower rates,” the report said. Barry Bosworth, an economist in Washington at the Brookings Institution research center, said many software companies such as Microsoft have exploited tax and trade rules in the U.S. and other countries to achieve a low overall tax rate. |
| Posted by:GolfBravoUSMC |
| #18 Barbara, my point was that from Microsoft's (and many other companies) perspective, they could pay a top Indian graduate a half to a third (or even less) of what they would pay an American. Old Spook's point is well taken. However, if you can throw 2 or 3 Indians (or possibly even more Chinese) at a problem, you still may come out ahead. By the way, I don't mean to put Indian programmers down. I have worked with some, both here and in India, who are very, very sharp. |
| Posted by: Rambler in Virginia 2009-06-05 21:00 |
| #17 When I was working non-DOD, you could tell the difference between Indians who graduated there and those who went to US colleges. The US engineering graduates were good. The ones from India were uncreative and barely competent to work, and even then only under close supervision. That being said, after a couple of years and forcing the US "cowboy" (risk taking) culture into them, some of the ones from India start to catch up. |
| Posted by: OldSpook 2009-06-05 20:30 |
| #16 You can't really compare the two, Rambler. The cost of living is much lower in India. I don't know what the equivalent of $3,000 a year in India is in the US, but it's not $3,000. I suspect it's a decent living there, and anyone making the equivalent of $30,000 while living there would be downright rich. |
| Posted by: Barbara Skolaut 2009-06-05 19:36 |
| #15 When I was in India a few years ago, I was shocked to learn that a starting programmer there made Rs 1000/month. That's roughly $3000US per year! Microsoft was paying top graduates of the top universities ten times that. That's still only $30000/year. Compare that to the US where a graduate of MIT or CalTech can pull in at least two or three times that to start. |
| Posted by: Rambler in Virginia 2009-06-05 19:11 |
| #14 All too easily given the neglect the US is heaping upon its educational system. Taking things for granted until it's about too late to do anything about it. My kids get six months of school out of every year if you take away all the breaks, weekends, in-service days, holidays, etc.. My wife can't get herself a financially meaningful job because of all the disruption to our schedule that comes from this. Two recesses each day, breaks, and bull$hit global warming curriculum to top it all off. Look at the school system in the up and coming parts of the world who don't own much more than a pot to pi$$ in and a window to throw it out of. Wonder why they have been spending so much of their energy on education a in simple, old-fashioned and cost-effective manner? See the difference? Figure it out. Of course these folks only cost $100/day, which is pretty tempting to those who are looking for excuses they can wave about to move their jobs overseas, aside from the fact that the US doesn't produce enough of their own. Because the educational system just can't. Partly because it is too busy educating rich or government-funded students from overseas. Who see the value of an education. |
| Posted by: gorb 2009-06-05 16:29 |
| #13 And how would Ballmer move those jobs offshore? |
| Posted by: Jack is Back! 2009-06-05 14:05 |
| #12 More hypocricy from the rich liberals. They thought Barry was only gonna screw over all the other industries and then pass the savings on to them? |
| Posted by: Thing From Snowy Mountain 2009-06-05 13:09 |
| #11 Nope. Trade plunged because Europe was relying on American dollars to finance German reparations which then were sent to the Euro victors (primarily France) who then used the money to buy American imports. Which then were recycled back to Europe to keep the trade wheel turning. That stopped with the Crash of '29 and American money stopped flowing into Europe. Trade had already plunged because there were no more dollars to fund it. Smoot-Hawley had little effect on trade flows but makes a convenient target for demonization. Notice back then the US was in the position of China and got hurt the most. The importer France got hurt the least. Yhe US suffered greatly during the Depression were we were the world's premier exporter, the Germans did also since they relied on American dollars. Franch much less since the dollars received from Germany bought American goods. The Depression didn't affect the international flow of Francs, therefore the French economy. |
| Posted by: ed 2009-06-05 11:53 |
| #10 Ed: Smoot-Hawley Tariff Act The Smoot-Hawley Tariff Act (sometimes known as the Hawley-Smoot Tariff Act; officially the Tariff Act of 1930) was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports were reduced by more than half. As a result of the Smoot-Hawley Tariff and other countries' responses to it, the world after World War II saw a push towards multilateral trading agreements that would prevent a similar situation from unfolding. This led to the Bretton Woods Agreement, in 1944, a great lessening of global tariffs starting in December 1945, and the General Agreement on Tariffs and Trade, in the 1950s |
| Posted by: GolfBravoUSMC 2009-06-05 11:34 |
| #9 "To an amoral pragmatist responsible for maximizing corporate profits" That's a publicly held company's job, Glenmore - to maximize profits for the shareholders. Who are not all "greedy" rich people but are equally (or more) likely to be ordinary middle-class people, retirees, and pension funds. I know |
| Posted by: Barbara Skolaut 2009-06-05 10:36 |
| #8 When you're punished for employing people, you'll employ people where you are no punished. |
| Posted by: Bright Pebbles 2009-06-05 10:35 |
| #7 "the government can, if it chooses, seize all of Microsoft's and any other company's assets and profits at any time. /sarcasm" Are you sure about that last part, Rambler? :-( |
| Posted by: Barbara Skolaut 2009-06-05 10:27 |
| #6 He sure did. He also gave $200,000 to Obama's inauguration party (Gates $50,000). |
| Posted by: ed 2009-06-05 10:00 |
| #5 I'll be very surprised if Ballmer, et al did not also support the election of the marxist One. Enjoy Mumbai, your new home. Would that I could follow you. |
| Posted by: N guard 2009-06-05 09:48 |
| #4 If the US doesn't want that to happen it needs to offer the companies some reason to stay here. It's called a tariff. It helped create the most productive, highly paid, and wealthiest society on earth. Sometime after WW2, our betters somehow forgot. |
| Posted by: ed 2009-06-05 09:25 |
| #3 Obama might bid Ballmer and Gates and families right to citizenship and life in the US. I could see it. |
| Posted by: 3dc 2009-06-05 09:19 |
| #2 Microsoft and pretty much all other software companies have been busily moving jobs offshore for years. Not workers, mind you, just the jobs, now filled by Indians and such. To an amoral pragmatist responsible for maximizing corporate profits such moves are obvious and essential. If the US doesn't want that to happen it needs to offer the companies some reason to stay here. An educated work force used to be a 'hook', but not so much anymore. Safety from criminal attacks is less of one now. Currency and legal stability was always a big one - but that's going fast. Easy access to biggest customer base - if the US is still that, it is not dominantly so. Higher costs - as labor or taxes - have to 'buy' something. What are we bidding? |
| Posted by: Glenmore 2009-06-05 08:25 |
| #1 What Mr. Ballmer seems to fail to understand is that the US government owns ALL resources. They kindly allow companies to keep most of them. However, he should realize that the government can, if it chooses, seize all of Microsoft's and any other company's assets and profits at any time. /sarcasm |
| Posted by: Rambler in Virginia 2009-06-05 07:24 |