Outsourcing

The political debate centered on Outsourcing's consequences for the domestic U.S. workforce. Some criticize U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of U.S. taxes. Criticism of outsourcing, from the perspective of U.S. citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll conducted in August 2004 found that 71% of American voters believed that "outsourcing jobs overseas" hurt the economy while another 62% believed that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. One given rationale is the extremely high corporate income tax rate in the U.S. relative to other OECD nations, and the peculiar practice of taxing revenues earned outside of U.S. jurisdiction, a very uncommon practice. It is argued that lowering the corporate income tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation where the revenue was raised, and once from the U.S.) will alleviate corporate outsourcing and make the U.S. more attractive to foreign companies. Sarbanes-Oxley has also been cited as a factor for corporate flight from U.S. jurisdiction. Policy solutions to outsourcing are also criticized. One solution is retraining of U.S. workers to new jobs in the form of the Trade Adjustment Assistance Act. However, these policy recommendations do not adequately aid all displaced workers and do not provide security to this "flexible" labor market.