Out with the old, in with the new–President

With President-elect Obama coming into office next year, there is a lot of speculation on what will happen in a lot of areas, including the location of overseas cmopanies and outsourcing.

By my understanding Obama’s tax plan will help remove tax incentives for companies that move their headquarters off shore. Basically, if a company were to move their HQ to Singapore they would be able to reduce their revenue tax claim here in the U.S. by whatever revenue amount they are able to claim out of Singapore, thereby reducing their U.S. tax base by that revenue.  

Now Singapore specifically has some other things that they make you do. For example if you save $20 million in taxes by moving there, you are required to reinvest that $20 million in that region. From what I can tell about Mr. Obama’s plan, your company can have its HQ anywhere it wants, but the plan is based it on if you are considered an American company (basically where your executives spend most of their time). So if your executives spend 51% of their time in the U.S. then you are an American company, and therefore you will not be able to claim shipping revenue in another country. So not only would you have to pay taxes on what you claim revenue out of the U.S., but what you claim revenue on in other countries. So whatever you pay taxes on in Singapore will be in addition to what you pay in the U.S., making it almost a penalty. 

Obviously, this is a very generic explanation of a ver compliated issue (and open to debate), but it does make me wonder if we will see companies move headquarters or even major facilities back to the U.S. or suspend plans to move (at least until they figure out loopholes). I know of a few companies that have hired or are looking for good lobbyists to help fight this tax plan, and others looking to help push it through. 

From a purely supply chain perspective, I tend to believe that there will be no change to those of us outsourcing components, smaller assemblies or even larger assemblies overseas then bringing them back to the U.S. for more value added labor and claiming of revenue.  

I am not sure how it will turn out, but bottom line I would like to see the global economy rebound ASAP. If you have any comments feel free to post them here.