Home / Opinion / Majority favors excise tax on foreign outsourced calls

Majority favors excise tax on foreign outsourced calls

More than half of respondents to this week’s RBJ Daily Report Snap Poll favor an excise tax on U.S. customer service calls transferred to foreign call centers.

In a bid to slow the outsourcing of call center jobs to foreign countries, Sen. Charles Schumer has proposed legislation that would impose a 25-cent excise tax on any customer service call from an American area code that is transferred to a foreign call center. The tax would be assessed on the firm that transferred the call.

His proposal also would require companies to tell the customer when a call is being transferred abroad and to disclose quarterly and in their annual reports how many customer service calls they received and how many were sent overseas.

Schumer, D-N.Y., said his measure is designed to retain jobs at U.S. call centers and provide an incentive for the return of jobs that already have gone abroad. Some 58 percent of readers back this approach.

Critics say, however, the measure would make companies less competitive and saddle them with additional costs that most would pass on to consumers.

Seventy percent of respondents say foreign outsourcing by U.S. companies hurts the nation’s economy. Only 11 percent of respondents say it helps our economy.

Nearly 600 readers participated in this week’s poll, which was conducted June 7 and 8.

Do you favor an excise tax on U.S. customer service calls transferred to foreign call centers?
Yes: 58%
No: 42%

In your opinion, does foreign outsourcing by U.S. companies help or hurt the nation’s economy?
Hurt: 70%
Neutral: 19%
Help: 11%


Any economist will tell you that tariff tax only reduces economic efficiency. Let the consumers decide. The issue should not be where the service calls are provided from but how well they are provided. The suggested tax will only raise prices to the end user. The poor quality of the service call center will drive the customers to purchase products from the company that provides good service. A case in point is Dell. We will not purchase any Dell products anymore as their offshore service is unbelievably bad.
—Frank Weiner, Bridgekey

I thought outsourcing these jobs was big business’s way to punish their customers by demonstrating just how bad customer service can be! Do you know anyone who does not have a story about speaking with someone who not only couldn’t understand them but couldn’t help them? Do businesses have any idea how they are hurting themselves by making us suffer like this? Is Schumer trying to save jobs, or is he acting in a humanitarian way to end human suffering?
—Bill Lanigan, Chamberlin Rubber Co.

I can’t think of anything less intelligent than dreaming up new taxes on business. Schumer has one real motivation, and it isn’t supporting business. This is just another way of providing a new source of revenue for the government to waste. This is the year the Chuck needs to be retired! He continues to harm New York, and the country with his every action. Enough!
—Dave Coriale

We live in a global economy. Continued growth and expansion of the global economy will serve to bring millions and millions of people around the world out of poverty and closer to economic freedom. Active participation in the global economy will be a huge long-term net positive for our country and our fellow citizens. Not sure why our senator and others want to erect barriers to our participation.
—Doug Lyon, Lyon Capital Management

Make it a dollar a call!
—R. Borden

Schumer has never had to make payroll for a business, so he should not be dictating how business should be operated. We live in a capitalistic society, and although I don’t personally like dealing with overseas call centers, these are business decisions that allow U.S. consumers to benefit from competitive prices for their products and services.
—Patrick Kelly

This question always comes up when the U.S. is not competitive. Sooner rather than later, we have to recognize we are in a global economy and the sooner we learn to compete, the better off we are. Corollary: Should foreign countries tax our exports to them?
—J.A. DePaolis

Companies that outsource customer service calls to foreign countries are already cutting corners because it’s cheap labor. The tax should go to ensure that these foreign workers are trained to speak clear English and provide true customer service instead of just lip service.
—Robin Taney

A 25-cent excise tax will have absolutely no impact on whether or not service calls will be handled overseas and consumers will see this in the form of increased cost of goods and services.
—Stuart Small, Pittsford Insurance Agency LLC

While I believe in punishing U.S. companies for outsourcing overseas, I also see this trickling down to the consumer in the long run. Companies will not take the hit themselves, as it will cut into profits and will need to be recouped.
—Caroline Baars, West Henrietta

American companies should hire American workers. Trying to save money at the expense of American jobs hurts our economy, and if a tax helps to keep the work force here, it is a good thing.
—Steve Lipson

We need to keep more jobs in America.
—Vinny Dallo, financial planner, Legacy Financial Planning, an office of MetLife

Another case of a politician grandstanding.
—Ted Marks

Excise taxes and tariffs only cause other countries to respond with taxes and tariffs. The last thing we need now is a trade war. I don’t know anyone who wants to work at a call center. Those were "dead-end" jobs just a few years ago. If we could find a way to get more students to finish high school and get better educations, we wouldn’t have to worry about protecting jobs to nowhere. The poverty rate of people who finish high school and wait until they are married to have children, is a small fraction of the overall poverty level. Let’s work on promoting more education and less teen pregnancy.
—Clifford Jacobson, WebHomeUSA

Is the IRS going to continue to have more than 1 million of OUR income tax forms processed in India?
—Floyd Rayburn, FG Rayburn Mason Contractors, Inc.

It’s just more Schumer TV time. He knows he’s in deep yogurt with NYers, so he’s back on the tube with all these worthless ideas and charges. Hey Chucky, try doing something meaningful for your people here. What an empty suit.
−Jim Duke

Schumer’s answer to everything…either a threat or a tax.
−Bob Miglioratti

Is Sen. Schumer naive enough to think that the 25 cents is not going to be charged back to the consumer? Great…encourage us to make durable purchases that come with free technical and/or service response by the selling store then change the rules so that "help" calls have a cost! Great!
−Jay Birnbaum

Sen. Schumer (I call him Sen. Hindsight because he always criticizes a situation after it goes wrong−where is he before the crisis happens) never ceases to amaze me. The typical attorney/politician, he always has to create a law to legislate behavior. These lawyer/politicians always try to use political solutions to solve economic problems, and it never works, it only makes the problem worse. There always has to be a new law−how else do we keep the plaintiff attorneys working and electing their puppet politicians?
−Dave Iadanza, Farmington

Fair trade is rough on everyone, but it’s necessary to keep the jobs and job costs fair.
−David Demallie

Let me get this straight: NAFTA is passed by the U.S. Congress. American corporations send their jobs overseas for cheap labor, and now the solution for poorly thought-out NAFTA is to tax American companies for phone calls made overseas. Apparently the only U.S. solution from our politicians is taxation which is about as innovative as NAFTA. How about this, incentivize U.S. corporations to get out of the foreign markets for a labor work force, pay U.S. workers a living wage and build America’s labor force and infrastructure.
−Leslie Apetz

We are part of a global economy, and nothing is going to change that. Whether it’s China, Korea or whoever the next developing industrial nation is, jobs are going to move around wherever there are the resources for manufacturing and services inexpensively and effectively. Taxes, tariffs or whatever are not going to change things. Our only hope to remain an economic leader is innovation and invention.
−Rick Corey, president, OpticsProfessionals LLC

Placing a tax on outsourced service desk calls will hurt U.S.-based businesses. This places an additional cost on these business, affects the bottom line and the overall ability to increase employment. By imposing a tax on U.S. companies, it also makes them less competitive with non-U.S. companies, which are able to take advantage of the cost-savings from foreign call centers. The law will also be hard to enforce and track and places an additional cost burden to track and report the calls, too. Another point is that call center expenses like other expenses offset taxable gains for a company and the result will be to lower the taxes a company will pay on earnings. In a time where we want to unshackle New York and attract business, why would we want to do this? This could push companies to locate out of the state to avoid these and the other heavy taxation costs New York imposes. We need to lower the rates so the tax base can grow. Continuing to increase the rates is a death-spiral that will end very badly for the state.
−Terry Abbott

Instead of trying to impose a tax on calls transferred to foreign call centers, why doesn’t the esteemed senator propose an elimination of the corporate income tax in order to make American companies and the U.S. more competitive? Why not propose the elimination of payroll and income taxes on persons working in call centers in the United States. Let’s incent businesses to do business here. First a tax on U.S. customer service calls transferred overseas, and then what? What won’t the government tax and when will they learn that taxation of goods and services results in less goods and services?
−Keith B. Robinson, CFO Diamond Packaging

People like to be serviced by those that they can understand. An excise tax does nothing but increase the cost of doing business, which will drive more business totally overseas, not just the call centers. Consumers have the opportunity to stop doing business with those that send calls overseas, this would be the most effective tool in helping to bring back these jobs to America. More taxes are not the answer.
−Rob Blair

Does this mean that they would also tax 7-11 clerks and Washington cab drivers?
−Daniel Mossien

While I am disappointed when I see U.S. jobs go offshore, it is important that we do not set a further precedent for "line item control" of the private sector by the federal government. Which task, service or product component in YOUR industry will be the next to be taxed and burdened with extra reporting costs?
−Juli Klie, Veritor

Once again, the senator seems to think you can tax America into prosperity! Lowering the costs of doing business (taxes, energy, etc.) and the regulatory burdens imposed on all Americans is the most effective way to grow jobs and the overall economy.
−Dennis J. Sugumele

His intentions are good, but this is one example of an attempt by government to control the marketplace. If we had less government control and lower taxes, there might be more of an incentive for companies to keep their call centers in the U.S.
−Arnie Boldt, Managing Partner, Arnold-Smith Associates

The concern of these outsource-happy companies holds no water. They will simply layoff more of the people who actually do the work and keep their bloated incomes intact while I will have to wait even longer on the phone to get bad support from their call centers. If this tax is put on all calls from every company that uses the international transfer system, then competition will not be affected as they all will have to pay the same tax! Smaller companies tend not to have the need for giant call centers and will not be affected adversely. If they are, I am sure there will be some kind of tax credit created for this purpose. Considering the relative pittance the call center workers are paid and the huge savings the big guys have been enjoying, and not passing along to the consumer of course, for years now the companies certainly can afford a quarter a call. That’s what it costs to use a public phone! We Average Joes can afford it, why can’t HP or Time Warner? The day that big companies start passing on the savings (rarely, if ever, happens) as well as the costs (which they do already) is the day I will care about their "competitive edge." Boo-Hoo!
−Dan Palmer, City of Rochester

Schumer follows a popular trend, as he must as a politician. I assume that he knows better than this proposal. Smart companies will keep their call centers in this country, because they are superior for the company’s acceptance by its customers. Excellence in the calling services is easier to achieve right here. Any good customer service must be local, i.e., within the USA. The whole matter will sort itself out, but the taxes will remain. Generally, we can see bipartisan agreement that good politics is better than good ideas.
−Ingo H. Leubner, Crystallization Consulting

This is just another money-grab by the politicians. The consumer pays all taxes eventually.
−R. J. Brinkman, chairman/retired, Brinkman International Group

Enough taxes! Government needs to get out of the way of private companies! Who do you think this tax will be passed on to? Customers! As annoying and unfortunate it is that some companies feel compelled to use foreign call centers, I believe that government taxation of private business is borderline criminal.
−Melissa Jock

No more taxes! The government should offer incentives, not additional taxes. (Use carrot vs. stick approach.) Adding taxes will encourage companies to move out completely and new companies to start up elsewhere. As global competitiveness is lost what are their options?
−E. Prince, RPC Photonics

I found that many calls to New York State to reserve a state park or renew some licenses are being handled by a firm in Arizona. I would think our state agencies would try to keep jobs in the state. Our state economy is in bad enough shape without having contracts given to out of state companies. Those dollars will be taxed in another state, spent on sales taxable items in another state and pay property taxes in another state, not to mention keeping people in another state off unemployment, which costs the state even more dollars.
−Tom Walpole, CPA

The first question is who exactly is going to count these "transferred" calls? Twenty years ago, we could have relied on the phone company to track them, but now, with VOIP technology, the incoming calls (probably digital already) could be run into a company’s digital PBX with multiple VPN connections to both foreign and local call centers. Since the calls aren’t on a public phone system, the responsibility for counting calls falls on the taxed business– and thus I expect plenty of underreporting. Second, this company will push companies to discontinue or to charge for live telephone tech support, while continuing to offer Internet-based tech support (via e-mail or a Web site) for free. This will be just another step in doing things on the ‘net instead of on the phone. Third, many of the foreign call centers that are taking our jobs away are in India. Sure, this plan might restore a few call centers to the U.S., but in doing so taking away Indian jobs. In the grand scheme, then, are we really making anything better? It seems to me we’re just trying to push our problem off onto some other people who we don’t have to see.
−Perette Barella, Devious Fish

I do not support taxes on "free" services. Ultimately, the outsourced services are part of the cost of ownership on the product or service you own. You acquired this service at a lower cost. Also, we the taxpayers will pay for the cost of services. It is no different than buying a microwave made in Mexico. It’s a tariff by another name. When was the last time you looked at your phone bill and see all sorts of charges which add 50 percent more to the basic single line home phone? It’s time to stop these "fees.” Or maybe we should move all tax revenue to fees for services, and then, everyone will pay taxes, not just those who are now overtaxed.
−Dennis Kiriazides, Xerox, retired

Great idea. Some of the time one cannot understand the other person in the foreign country regardless of how hard they try to help.
−Jack Bent

How about a tax on Schumer of $100 for every time he appears on television? It would probably raise more money than this proposed tax.
−J. Biemiller

On the surface it makes sense to say that any job that is outsourced should carry a financial penalty to the company doing the outsourcing. After all, we have to "punish" them for sending jobs overseas. But, ANY scheme that resorts to taxing the product or service will only lead to higher prices to the consumer. I’d much rather see legislation that would require companies to provide their customer service from the source of the U.S.-based facility. I’m sorry, but one more tax would only be used for general budget and would NOT solve the problem. Note to Mr. Schumer: Don’t beat around the bush. If you want the jobs to stay here, then put a bill out for the voters to decide if it means that much. If it does, the bill passes. If it doesn’t, it won’t. I know, the consumer will pay anyway, but the objective will be met. The jobs stay here. Never mind the bogus tax schemes. If we really want change, make it law.
−Rick Bradley

We don’t need another tax on anything ever.
−Karl Schuler

Schumer seems to think he can tax away any and every problem. How shallow! Remember in November.
−Tom Shea, Thomas P. Shea Agency, Inc.

Tax a call center? Sure. Why not? Aren’t we the most taxed state anyways? Guess who’s going to pay the tax? Now ask yourself what is the tax going to accomplish? Schumer says it will discourage placing call centers offshore. Who here wants those jobs? Do you think that is a good job that you want? Most call centers are run like sweat shops and we on the receiving end are tortured by people who can barely speak our language and read from scripts. As you get the answer "Hello my name is George" from the respondent in India. Poor service in call centers drives people away from those companies who use them. Now, let’s talk seriously and discuss how we can keep some good paying stable jobs in the USA. I’m talking manufacturing that has provided a lot of good family income and taxes. Find a way do incent companies to build in the USA and dis-incent them to go overseas. Is the answer higher taxes on imported goods, or higher corporate taxes on overseas manufacturing plants? How about a nice law the Brazilians use. They mandate local content laws. That means if you want to sell a product in Brazil then a certain percentage of it must be made in Brazil by Brazilians. I suggest we start with a 50 percent local content law. Any product that does not contain a minimum of 50 percent local manufacturing content will have an excise tax of 25 percent of the product’s value. Now to counter that, the company could offset the tax by increasing manufacturing of other products produced in the USA up to an equal value. Like the carbon tax. So the idea here is to encourage local manufacturing (or service) while discouraging off shore manufacturing. Also, we should not allow any high tech products manufactured outside the U.S. This leads to piracy and copying and delivering inferior products. So if the U.S. needs money, here’s a way to get it and make jobs. Good luck.
−Bob Stein 

(c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.



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