A little observed provision to remove the tax incentives to offshore outsource your job was passed last Friday by the House of Representatives in the American Workers, State, and Business Relief Act of 2010 bill.

The legislation ties corporate revenues directly to the foreign tax credit. If passed, no longer can a corporation claim credits for foreign taxes yet park the actual profits made offshore in a low tax country. Previously corporations claimed the foreign tax credits, yet only to reduce their U.S. tax liability. The actual foreign revenues were not repatriated into the United States. If one obtains tax credits yet doesn't have to actually pay tax on profits accrued offshore, this encourages the movement of capital, assets and production overseas, including jobs.

In White House Semi-English:

When a U.S. taxpayer has overseas income, taxes paid to the foreign jurisdiction can generally be credited against U.S. tax liabilities. In general, this "foreign tax credit" is available only for taxes paid on income that is taxable in the U.S. The intended result is that U.S. taxpayers with overseas income should pay no more tax on their U.S. taxable income than they would if it was all from U.S. sources. However, current rules and tax planning strategies make it possible to claim foreign tax credits for taxes paid on foreign income that is not subject to current U.S. tax. As a result, companies are able to use such credits to pay less tax on their U.S. taxable income than they would if it was all from U.S. sources – providing them with a competitive advantage over companies that invest in the United States.

In reading the bill, first pass, it does appear the White House proposal is in the latest version.

The changes are in the section TITLE IV—REVENUE OFFSETS, Subtitle A—Foreign Provisions of H.R. 4213. The section starts on page 229 in the bill text link.

Multinational corporations will do everything in their power to strip out these changes and so will the powerful NASSCOM, or Indian offshore outsourcing business group and their U.S. lobbying counterpart, USINPAC.

Expect war from our Benedict Arnold Tech Companies such as IBM, Microsoft and HP. IBM literally has an algorithm to manipulate global tax structures and has been firing every American who isn't nailed to their desk. HP just announced 9000 more layoffs. Their mammoth lobbying efforts are amazing because the bill extends the R&D tax credit, which greatly benefits these very same companies.

Meanwhile Chuck Schumer wants to tax foreign call centers. For each call transferred overseas, Schumer wants a 25¢ charge put on the call. What? No more nonsensical, useless, script reading, rambling in your ear, wasting your time, creating more frustration customer support via the phone? Say it ain't so!