President's Budget Update: Insourcing

The most recent focus of President Obama's initiatives has been on "insourcing," or providing incentives to companies to bring jobs back to the US from overseas. According to CNN's article, the proposal, which will come in a few weeks and surely be included in the President's budget, will work on both sides of the equation: providing incentives to companies who bring business back home and eliminating incentives for companies that do the opposite.

Past Obama proposals have already included the latter half. His budgets have offered a number of changes to the international corporate tax system, moving it more towards a "worldwide" system where foreign-based income is taxed as it is earned. The international tax proposals in his submission to the Super Committee, affecting both individuals and corporations, would raise about $115 billion over ten years.

What the incentives will be is more uncertain. A repatriation holiday, which would allow companies to bring earnings back home at a drastically reduced or 0% tax rate, has been a popular proposal in Congress; however, it does not seem likely that President Obama would go this route. The concerns with these types of incentives are how they determine who qualifies and if these incentives will simply benefit companies who would have "insourced" anyways.

Defense cuts, a small federal employee pay increase, and insourcing incentives are the known parts of the President's budget so far. Stay tuned for more information as it becomes available.

 

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