Brain drain in tech's future?

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It's The Tax Gap, Stupid (Ed)

P-1) Not all lawyers are bad and I know John. John is one of the good ones.

P-2) The root cause of unemployment amongst technology workers actually
has very little to do with eighth grade algebra.
There is no skills gap. There is, however, a significant tax gap.
Developing countries use unfair trade practices and do not collect taxes and
This is a violation of the WTO Subsidy Rules.
Investment which attracts jobs is attracted to profits and low corporate taxes.
According to a recent KPMG study, the United States and Japan have the
Highest effective corporate tax rates in the world.
Supporting information is appended down below (India's Technology Subsidies and
Corporate Taxes, A Race To The Bottom).
The USA's Senators and Congressman have been talking about "Tax Simplification"
For decades and have failed. It the USA's politicians who are underperforming
their peers in other countries

P-3) In a global economy, U.S. educational institutions need to stop whining
About low enrollments and learn to compete by supporting lower taxes for jobs.
Without jobs, an education has no value.
Furthermore, without jobs, fewer PhDs are needed to tech technology disciplines.

P-4) Those computer industry leaders defending the use of foreign talent have
(intentionally or unintentionally) adversely affected hundreds of thousands of
native/local American Workers and these "leaders" have violated U.S. labor laws.

P-5) In addition to the National Science Board's findings of a troubling decline,
The Internal Revenue Service has also observed a "troubling decline" in salary
Income tax collections.
The IRS's observation is also evidence that there are, in fact, FEWER jobs in the USA
the number of jobs requiring science and engineering training also continues to decline.

P-6) I have to agree with James Foley... pay attention, this is a big problem.
However, it is amazing how many refuse to "pay attention" until this problem threatens
To affect them personally and by then, it's usually to late. What were you Senators and
Congressman thinking about... profits in individual companies rather than their constituents.
And why would James Foley need more money to teach fewer PhDs? It seems he should
Need less money since so many good schools been launched around the world.

P-7) And now for a History Lesson about not producing enough degreed engineers in the USA
At a time when unemployment amongst technology workers is extremely high.
This type of information seems very untimely and downright ignorant of what is actually
going on in the labor market for technology workers.
I guess the obvious question for Ed Fruenheim is "What school did you graduate from?".

P-8) Another question for Ed to ask himself...
"Why would foreign workers want to go to school here if there are no jobs here?"

P-9) Norm Matloff has it right.
In my own words, "Without Jobs, An Education Has No Value".

P-10) Wienstein has it right... immigration has put pressure on salaries.
Salaries should be higher.
Instead, what is going on now that contracting companies are monopolizing
The labor market and getting 50 or 60 or 70 dollars per hour and paying the
degreed engineering graduates 30 dollars per hour.
This makes our economy even more inefficient and Less competitive.

P-11) Enrollments are Up? According to everything I have heard, including teachers
At DePaul University's school of Computer Science, enrollments are down significantly.

P-12) PhDs are nothing magical anymore. The technology industry is now so huge, it is
Experiencing what is called "Specialization" and so narrowly scoped certifications have
High demand to ensure you et the education first and the job second... relieving companies
The obligation of the expense to train employees on the job.

P-13) The only Visa reforms we should have at a time of high unemployment amongst
technology workers is to protect American Workers (not foreign workers).

P-14) Hira has it right. H-1Bs have enabled technology transfer and off shoring.
Many foreign workers return home to lead projects teams in their homeland.
The real issue is the Tax-Gap (and not a skills gap nor other diversions).
The WTO allows this kind of Tax-Gap (unfair trade practice) for developing nations
Until a developing nation owns 3.5% of a certain industry. However, as the 3.5% thresholds
Are crossed, U.S. Trade Representatives have failed to raise the proper disputes with
The WTO, World Trade Organization. The U.S. Trade Representatives have failed
To keep the playing field level and competitive in terms of corporate taxes.

P-15) John Miano has it right. U.S. schools often prefer foreign students because
Foreign student are often of upper class and capable of paying their tuition in cash
(rather than a student loan). The preferential treatment should be going to the
U.S. Citizens and not foreigners.

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HERE IS MORE INFORMATION TO SUPPORT MY ABOVE COMMENTS:

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ACTIVISM REQUIRED AGAINST INDIA?S TECHNOLOGY TAX SUBSIDIES

This is a letter writing campaign.
Please read this article and help in the campaign to get his information published to activism web-sites and Senators and Congressman and the media. Thank You.

To better understand the competitive forces in motion around our global economy, investigate India?s software development industry in the context of corporate taxes. First, look at the WTO Subsidies Agreement http://tinyurl.com/2pc4o which defines a subsidy as including ?- foregone government revenue (e.g., a tax credit)?.

Next, review India?s Income Tax Circular (November 23, 1994) http://tinyurl.com/5jpd2 and what we find here is the term ?Tax Holiday? recurring over and over again specifically for ?Software Technology Parks (STPS)? and ?Electronic Hardware Technology Parks (EHTP)?. There are both 5 year tax holidays and 10 year tax holidays which are a guarantee from the Indian government to the companies who locate onto the shores of India that they will not have to pay any taxes at all for 5 or 10 years.

India?s tax holidays seem to be a clear violation of the WTO Subsidies Agreement. We contacted the United States Department of Commerce Office of Service Industries and Office of IT. Ultimately, we were put in contact with the United States Trade Representatives Office. Only U.S. Trade Representatives & Specialists may raise disputes with the WTO. The U.S. Trade Representatives is response is here?

The general prohibition against export subsidies is set forth in Articles 3.1 (a) and 3.2 of the SCM Agreement.
However, India would not become subject to the export subsidies regimes of the Subsidies and Countervailing Measures (SCM) Agreement http://tinyurl.com/5ogg3 until its per capita GDP reaches $1000. We use World Bank and IMF data for GDP http://tinyurl.com/25am9 .

Article 27 of that agreement, however, establishes "special and differential treatment" for developing country members (of the WTO) and relaxes (prohibited) subsidy disciplines with respect to developing countries (specifically 27.2).

Article 27.5 of the SCM creates an exception to the exception to revoke special (subsidies) treatment for a particular developing if the country reaches "export competitiveness". Here, the U.S. Trade Representatives would have to request the MTO Secretariat to compute India's exports. If it is established that India?s exports of software have reached 3.25 percent of world trade in that product for two consecutive years. And if one did establish that, as an Annex VII country, India would have eight years in which to gradually phase out its subsidies.


The WTO Subsidies Agreement http://tinyurl.com/2pc4o defines Actionable Subsidies as follows?
A subsidy granted by a WTO member government is "actionable" under the Agreement (again, certain exceptions are made for agricultural subsidies) if it "injures" the domestic industry of another country, or if it causes "serious prejudice" to the interests of another country. Serious prejudice can arise in cases where a subsidy:
?impedes or displaces another country's exports into the market of the subsidizing country;
?impedes or displaces another country's exports to third countries;
?significantly undercuts the price of a "like product" (e.g., an identical or similar product produced by another country; or,
?increases the world market share of the subsidizing country for a particular primary product or commodity.

0) Now, have our jobs been impeded and displaced? Yes.
1) Have our exports been impeded and displaced? Yes.
2) Have other countries exports been displaced? Yes.
3) Has the price of software been significantly undercut? Yes.
4) Has India's subsidies increased their world market share in
the technology industry (hardware + software + services) Yes.

Is this subsidy Actionable by our U.S. Trade Representatives? Yes.

Our U.S. Trade Representatives need to represent the American Workers and take action against India?s Tax Subsidies for foreign technology companies. I need your support to make this happen, now.

Please publish this information on your web-site so that it is readily and publicly available information.

Also, please forward this information to your Senators http://www.senate.gov and Congressman http://www.house.gov and state governors http://www.unionvoice.org/campaign/stateoffshoring .

In addition, please make this information available to?
? The media
? and professional and
? activist organizations and
? anyone who may be able to help support this campaign and
? get action from our U.S. Trade Representatives.

About Ashley Wills, U.S. Assistant Trade Representative:
Wills, E. Ashley (b. 1949) of Georgia. Born in 1949.
Foreign Service officer; U.S. Ambassador to Sri Lanka,
2000-Maldive Islands, 2000-. Still living as of 2002.

FICCI and Ambassador E. Ashley Wills, Assistant United States Trade Representative
http://www.ficci.com/ficci/media-room/photographs/2004/jun/june23-us-ambassador.htm

Mr. Onkar S Kanwar, Sr. Vice President, FICCI,
Federation of Indian Chambers of Commerce and Industry
http://www.ficci.com/ficci/index.htm

AMBASSADOR E. ASHLEY WILLS DEPARTS SRI LANKA
http://usembassy.state.gov/srilanka/wwwhpr20030616.html
Colombo, June 16, 2003. Ambassador E. Ashley Wills will depart his posting in Sri Lanka on June 17. His onward assignment is as Assistant United States Trade Representative. He will be based in Washington, D.C.

Interview. Ashley Wills ?We Can?t Bully India?
http://www.businessworldindia.com/july1204/news17.asp

Meeting with Mr Ashley Wills, New Delhi
http://tinyurl.com/5fepd
Services: Mode-4 (cross border movement of professionals) has been
brought up a couple of times. This is an enormously important issue for your
nation and for many other nations and is for ours as well. I believe our
capacity to be generous on Mode-4 issue will depend directly on the state of
the American economy. If our economy begins to grow again as there are
some indications it is doing, then I believe the United States will be better
able to accommodate freer movement of professionals and other peoples
under Mode-4.
If our economy falters, if unemployment remains high in the United States,
our capability to accommodate the wishes of India and other countries under
Mode-4 will be restricted.

LTTE responds to US Ambassador
http://www.tamilnet.com/art.html?catid=13&artid=8853

Email Address: Ashley_Wills@USTR.EOP.GOV

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INTERNATIONAL CORPORATE TAXES, A RACE TO THE BOTTOM

According to KPMG's Corporate Tax Rates Survey ? January 2004 http://tinyurl.com/39x6j , a survey including 69 countries around the globe, there is a global trend of decreased corporate tax rates around the globe. This trend is often referred to as ?A Race To The Bottom?. According to A Taxing Battle; A Global Headache http://tinyurl.com/2xjuz ,
?OECD countries cut corporate-tax rates by nearly seven percentage-points between 1996 and 2003. Some have cut aggressively. Ireland slashed corporate-tax rates by some 23 percentage points over the same time period. International companies tend to report higher taxable profits in countries where taxes are lower.?
Somewhere along the line, the United States decided to not enter this particular race and be competitive in the global economy. According to the 1?st article, the highest effective corporate tax rates are in Japan and the United States. The United States corporate tax structure remains trapped at 35% plus 1 to 12% for state and local taxes with continuously expiring tax subsidies which are often not renewed by Congress. For executive officers of U.S. based corporations, this tax structure is akin to playing Russian Roulette and makes it difficult, if not impossible, to plan and predict a corporations financial condition and be competitive in the global economy. U.S. Corporations residing within the United States are then burdened further and are required to hire armies of Tax Accountants and Consultants to account for subsidy claims. As multinational companies move more and more of their operations off shore, these burdens are lifted because other countries tax structures are more stable, permanent, simple, flat and lower.

Posted by: mark_pecora   Posted on: 08/17/04 You are currently: a Guest | Members login | Terms of Use

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