Microsoft chief executive Steven Ballmer says the world’s biggest software maker will send workers overseas if taxes rise on U.S. companies’ foreign profits, as President Obama has proposed.
“It makes U.S. jobs more expensive,” Ballmer told Bloomberg. “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.”
Now U.S. tax rules allow companies to defer paying corporate rates up to 35 percent on most types of foreign profit, as long as the money stays invested overseas.
Obama wants to drop that incentive to keep foreign profits overseas, so that companies will invest the money in the U.S.
Microsoft says its tax rate totaled 26 percent in 2008.
“Our effective tax rates are less than the statutory tax rate due to foreign earnings taxed at lower rates,” the company said in its annual report, cited by Bloomberg.
Obama wants to restrict or drop about $190 billion in tax breaks for companies’ offshore operations. Several business groups oppose the move.
“This plan will reduce the ability of U.S. companies to compete in foreign markets, which will not only reduce jobs, but will also cripple economic growth here in the U.S.,” John Castellani, president of the Business Roundtable, told The New York Times.
But Barry Bosworth, a Brookings Institution economist, told Bloomberg many software companies such as Microsoft have exploited tax and trade rules to cut their taxes.
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