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InsiderOnline Blog: October 2012

Obama Invents a New Tax Credit to Oppose

So the federal government gives companies a tax credit for outsourcing? During Wednesday night’s debate, President Obama said he supports repealing that tax credit and criticized Republicans for defending it. Only thing is, there is no such tax credit. According to Kevin Williamson, the President was most likely referring to a bill introduced by Sen. Debbie Stabenow (D-Mich.) that sought to disallow expensing for costs related to outsourcing. That bill doesn’t end a special credit for outsourcing; rather, it creates a new special penalty in the tax code. As Williamson explains, under that provision, for example,

if you send a letter to your lawyer, the postage is a deductible expense. If you send a letter to your offshoring consultant, the postage is not a deductible expense.

So the special outsourcing tax credit isn’t really there — it’s just regular-ol’ deductible business expenses. Rather than repealing an instance of tax favoritism, Democrats (and some Republican miscreants) propose to use the tax code to inflict punitive measures on businesses that make business decisions at odds with Washington’s political preferences. [National Review Online, October 4]

Posted on 10/04/12 05:10 PM by Alex Adrianson

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