If Senator Charles Schumer (D-NY) gets his way, the cost of calling for tech support is going up. Under a new proposal, US companies would be taxed 25 cents per call outsourced to a foreign call center; there would be no fee for calls transferred to a call center inside the US. The bill would also require companies to disclose to customers when their calls are being transferred outside of the US and the company would also have to tell customers where their calls were being transferred.

Schumer said about the proposal, “[i]f we want to put a stop to the outsourcing of American jobs, then we need to provide incentives for American companies to keep American jobs here.”

Currently, many US companies route calls outside of the country. Top destinations for US call centers are India, Indonesia, Ireland, Canada, the Philippines and South Africa. Labor in those countries tend to be cheaper which is why US companies use them as opposed to US employees. The result is job loss. One survey conducted by the Technology Marketing Corp claims that from 2001 to 2003, the US lost 250,000 call center jobs alone to India and the Philippines.

In addition to protecting jobs, Schumer claims the bill would protect customers. Currently, personal information held outside of the US (yes, that means bank account numbers, credit card information and the like) is not subject to the same level of consumer protection as that information held inside the US.

There’s no estimate yet on how much money the tax is expected to generate.

But what do you think? Good for US jobs? Or likely to drive up costs for consumers? Or both?

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Author

Kelly Erb is a tax attorney and tax writer.

Comments

  1. It is surely a new day, I would support a democrat sponsored legislation?

    Seems the idea is a great idea, instead of fining a .25 why not about $2 for every phone call?

    Jeff Day

  2. Good = for US jobs
    Bad = Ups costs for consumers (and obviously companies)

    It’s a toss up. The unprotected information gives a slight advantage to the ‘good’ for the idea. But the best way to see if it’s a good/bad idea is to further the thinking and apply the principles Schumer proposes to other businesses. Then see how they would play out there to come up with a better answer. At least that’s me.

    Q. I thought democrats intensely dislike the US being exclusionary, imperialistic and thinking that we are the end-all, be-all? If that is part of the ideology then this is bad for their goals.

    Still appreciating all of your other posts too. Thanks.

  3. I wonder what Schumer’s response will be when those countries jack up the cost of our imports?

  4. Bad for both. Democrats always try to get us to believe that by shipping jobs out of the US, we are losing jobs here. It’s an endless cycle. If we bring the jobs back here, costs go up for everyone, individuals and businesses alike, which means you have less money to spend on other things which will cause other jobs to be lost, right? Adding another tax, which will only be passed onto the consumer, will not solve anything. It just puts more money in the pockets of the government which I for one am quite fed up with!

    However, I wasn’t aware of the lower standards. We as consumers should demand from the companies that they protect our information even outside of the country.

  5. I’m all for this, not so much that it might generate some tax revenue or that I be told when my call is being outsourced (I usually can tell; I can’t understand them, they can’t understand me). No, what I really like is keeping my sensitive information out of loose third-world databases. That’s the real bummer; there ought to be a huge fine for every time someone’s information is hacked from one of those databases.

  6. Likely News Story to Be Released 1 Year from Today:

    In other news, India has initiated a WTO complaint against the US for taxing foreign call centers differently than domestic call centers. Most legal commentators expect a swift verdict in favor of India as this is a clear violation of the GATS treaty.

    Schumer, the original architect of the plan, has quietly backed away from the proposal as he realized that NY law and consulting firms do significant business setting up these Indian call centers. Ultimately, the proposal had the unintended consequence of costing NYers jobs.

  7. The cost of labor in these countries is so much lower than the cost of hiring a US employee that I really can’t imagine a $0.25 tax/minute making much of a difference other than slightly raising the companies expenses. And we know what happens when a company’s expenses are raised: costs pass to the consumer.

    Let’s call this what it really is: a revenue raiser.

    I’m admittedly a bit confused on the security of information. If the company is US based, wouldn’t said company be required to protect the information of it’s consumers regardless of where it is located?

  8. Claudia Cantelmi Reply

    I would love to see similar legislation be sponsored and passed for the personal medical information being outsourced to India, the Phillipines, etc. It would not only protect extremely confidential patient information, it would also bring back jobs for medical transcriptionists/medical language specialists. Do you know where your medical records are?????

  9. ok .. first of all .. dont be fooled .. if you force a company to pay a call center agent $10 in the US as opposed to $3 hr in another country, where do you think the coast will be passed on to?

    How many of you like shopping at Walmart? do you like those low prices? Where do you think the saving come from when companies outsource ?

    As far as you information being safe.. this is a scare tactic… American Companies doing business outside the US have the same liability and i will tell you are VERY risk conscious. It is still their brand name on the line and customer satisfaction is still a top priority …

    And oh … BTW .. for those who wish to be critical of overseas call center agent accents… have you listened to your local, slang, slow speech, cant talk with food in their mouth, chewing gum, barely pass high school reps lately…???

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