Obama Protectionism Will Cut U.S. Jobs: Cisco's Chambers
Saying he expects the Obama administration to raise taxes on profits generated outside the U.S., Cisco CEO John Chambers warned that such a policy will lead to fewer new Cisco jobs in the U.S. and more hiring overseas as the company embarks on a new era of sustained double-digit growth.
Saying he expects the Obama administration to raise taxes on profits generated outside the U.S., Cisco CEO John Chambers warned that such a policy will lead to fewer new Cisco jobs in the U.S. and more hiring overseas as the company embarks on a new era of sustained double-digit growth.Chambers, speaking at an investment conference last week, said Cisco certainly will be creating lots of new jobs because it plans to grow 12% to 17% per year, according to a Reutersnews story. But due to the White House's current and anticipated positions on tax policy, Chambers said, the vast majority of those new hires will occur outside the U.S. From the Reuters article:
He said Cisco is likely to invest more aggressively overseas, and took the opportunity to call on the U.S. government to ease taxes on corporations' overseas profits.
"Part of it depends on, does the U.S. make a logical decision about allowing the repatriation of cash or not. I'm assuming they're not going to. We'll watch for probably another year. If that doesn't occur you're going to see us be very aggressive outside the U.S.," he said.
"However, if I were a leader in the U.S., I would bring back what could be as much as $900 billion of cash to the U.S. to make $30 or 40 billion in taxes, and tie it to headcount increases here and apply it locally."
Cisco has been increasing its overseas investment in recent years, particularly in China and India.
Chambers is certainly not the first CEO of a leading U.S.-based IT firm to urge the Obama administration to rethink its corporate tax policy in light of the assured damage such taxation will have on U.S. employment.
As we reported exactly one year ago, both Microsoft CEO Steve Ballmer and Symantec CEO John Thompson made it clear they believe that "the Obama administration's plans to revise tax policy on foreign profits will force U.S. companies to move more employees overseas due to the higher cost of business and lower profits such policy would trigger."
"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.," Ballmer said in an interview with Bloomberg News. The Obama administration's effort to limit deductions on foreign profits would lead to increased costs in the U.S. for Microsoft, requiring Ballmer to fulfill his "fiduciary responsibility" to shareholders by lowering the company's costs by shifting jobs to other countries with lower corporate tax rates.
Bloomberg News also reported that Symantec's Thompson "said software companies are frustrated by being called tax cheats and compared with companies that moved their headquarters to low-tax countries such as Bermuda."
Calling the Obama proposals "counterintuitive," Thompson said, "It is a little bit ironic that most of our most significant trading partners and partners globally have taken the tack that they'll reduce corporate tax rates to stimulate economic growth and not raise corporate tax rates," Bloomberg reported.
The comments from leaders of two of the most-powerful software companies in the IT industry came one day after top executives of Indian IT software and services companies said the Obama proposals will hurt American competitiveness.
Thompson and Ballmer made the comments during a series of events in Washington as 10 software companies met with Obama administration policymakers to present their opposition to the proposed new policies about offshore taxation. Bloomberg said Thompson and Ballmer were joined by several other software-company executives who participated in a Bloomberg roundtable discussion during which they said the proposed policies "would hurt domestic investment, reduce shareholder value and increase the cost of employing U.S. workers."
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