May 4, 2004 4:00 AM PDT

Poll shows support for offshoring tax

More than 40 percent of U.S. technology executives surveyed would be willing to pay higher taxes to compensate for jobs they send offshore, according to a nationwide poll conducted jointly by CNET News.com and Harris Interactive.

These executives agree with the proposition that companies should be required to pay a "per-head tax" for every position sent to another country. The poll also suggests that companies would be willing to help pay for improvements in the quality of American education and worker retraining to help the United States maintain its competitive edge in technology.

The results were part of a wide-ranging survey of nearly 500 information technology "decision makers," defined as having a role in acquiring or recommending IT products or services for their companies. The respondents, who were polled online in late April, work across industry segments, in various departments and levels at their companies, including the most senior ranks.

Economists and others expressed surprise that so many executives would accept an offshore outsourcing tax, especially because the reason often cited for foreign outsourcing is saving money. Some suggested that the poll results reflect a new sensitivity toward the controversial practice, which has been met with vocal opposition by critics who say companies are callously replacing American jobs with cheap labor overseas.

"Clearly, they have political problems," New York University economist William Baumol said of companies that are sending work overseas. "Even the most ardent supporters of globalization realize that it can be extremely hard on the people who have to move or lose their jobs. If globalization makes the country richer, then certainly, we can afford to do something for the people who are hurt by it."


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The export of American high-technology work has become an issue in the presidential campaign, but neither President Bush nor Democratic challenger John Kerry has proposed a new tax on businesses specifically to compensate for jobs sent abroad. However, the Harris Interactive-CNET News.com poll suggests that corporate America may be more receptive than the professional politicians might have assumed.

Nearly 58 percent of all respondents believe that companies that outsource should pay higher taxes to fund the retraining of workers who lost their jobs to offshoring. About 10 percent believe that should apply to all U.S. businesses, regardless of whether they send workers overseas, and a little more than 32 percent oppose the concept altogether.

Almost 30 percent of respondents agree that all businesses should help the American education system, regardless of whether they employ workers offshore. Another 34 percent agree that companies should contribute to education but said it is the particular responsibility of those that outsource. About 36 percent oppose the idea altogether.

On the "per head" levy, slightly more than 40 percent of respondents identified as executives supported such a blanket tax, while 39 percent

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A labor activist tells techies to be wary
oppose it. Support was even higher among respondents from all corporate levels: Nearly 48 percent back the idea of such a tax, and 31 percent disagree, while 21 percent have no opinion.

Despite the virtually even split among executives on this question, the number of supporters is significant in light of industry's historical disdain for taxes and government restrictions on business in general.

"Rising litigation and regulatory costs undermine U.S. business competitiveness, both at the federal and state levels," the American Electronics Association said in a recent report on the U.S. technology industry's ability to compete in an increasingly global economy. "Government policies that intend to prohibit or reduce offshore outsourcing will be self-defeating."

Yet the poll's respondents show a clear split over the proper role of government in offshore outsourcing. More than 45 percent believe that Uncle Sam should not play any direct role, while nearly 47 percent believe that the government should protect U.S. jobs from moving outside the country.

Moreover, respondents do not necessarily believe that it is good for the United States: 63 percent indicate that the exportation of technology jobs threatens the long-term technology leadership of the United States. A little more than 22 percent disagree, while the remainder have no opinion.

"It's more complex of an issue than the way it's often portrayed. Most people would tell you that it really isn't just a cost issue--it's never just a cost issue," said former Republican Congressman Rick White, now head of the bipartisan industry lobbying group TechNet. "You would never offshore unless you could get at least the same kind of quality, and even then, you wouldn't do it unless you were sure you could protect your intellectual property, to make sure it wouldn't be used against you in competition overseas."

More than 45 percent do not believe that offshore outsourcing brings benefits to American consumers, compared to more than 33 percent who say it does. The rest are undecided.

Skepticism over offshoring is further reflected in responses on the presidential race. More than 62 percent indicate that they would not vote for a presidential candidate who supports foreign outsourcing, compared to almost 38 percent who indicate that they would. Even among executives, opposition to a pro-offshore outsourcing candidate remained relatively strong, with a margin of 58 percent to 42 percent.

On the surface, at least, the finding contradicted the conventional wisdom that senior executives, anxious to cut costs and maintain flexibility, would naturally favor outsourcing.

Other findings of note in the CNET News.com-Harris Interactive poll:

• Companies accept global outsourcing as a new reality. Nearly 54 percent agree that offshore outsourcing is a permanent fixture in the high-tech landscape. Only 19 percent believe that it is a passing phenomenon, while 27 percent have no opinion.

• The vast majority of respondents--81 percent--indicate that their companies would maintain the amount of work they outsource outside the country in the next 12 months. Another 3 percent intend to increase offshoring, while only 5 percent plan reduce it. The remainder are uncertain.

• Almost half the people surveyed agree that the practice of offshore outsourcing is a natural part of the evolution of a capitalistic society, while about 29 percent disagree. The rest are undecided.

• More than 65 percent believe that consumers in other countries gain benefits from offshore outsourcing, while 16 percent disagree. The rest are undecided.

This poll was conducted online within the United States between April 20 and 22 among a nationwide cross section of 495 information technology decision makers. Figures for company size were weighted to bring them into line with their actual proportions in the U.S. business population. In theory, with probability samples of this size, it is reasonable to say with 95 percent certainty that the results have a statistical precision of plus or minus 4.4 percentage points of what they would be if the entire U.S. population of IT decision makers had been polled with complete accuracy.

 

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