If you hire US-based engineers working on R&D (most software engineers) then you amortize their pay over 5 years. Foreign-based engineers working on R&D get amortized over 15 years.
You get to expense 3x as much for domestic engineers compared to foreign engineers. This means you need to pay more taxes upfront for having a foreign R&D team, which is bad for cashflow. Your company could be losing money (unprofitable) but still owe corp income taxes because of Section 174.
If the gov charged "tariffs" on foreign labor or services provided, especially for certain countries that labor is typically outsourced to, or certain types of labor/services (e.g. support, engineering, etc), that'd probably be an effective way to discourage offshoring.
If you hire US-based engineers working on R&D (most software engineers) then you amortize their pay over 5 years. Foreign-based engineers working on R&D get amortized over 15 years.
You get to expense 3x as much for domestic engineers compared to foreign engineers. This means you need to pay more taxes upfront for having a foreign R&D team, which is bad for cashflow. Your company could be losing money (unprofitable) but still owe corp income taxes because of Section 174.
If the gov charged "tariffs" on foreign labor or services provided, especially for certain countries that labor is typically outsourced to, or certain types of labor/services (e.g. support, engineering, etc), that'd probably be an effective way to discourage offshoring.