Increase in cost of foreign labor affect employment of labor

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Reference no: EM131392053

American corporations are assessed a federal tax on their profits, defined as revenues minus costs. One of the costs they can deduct from revenues, of course, is the cost of labor. Candidate X, in trying to discourage the “offshoring” of American jobs to other countries, proposes that the corporations not be allowed to deduct the costs of hiring workers who perform their tasks in foreign countries. This proposal will raise the corporate taxes of companies that offshore jobs. How would the increase in the cost of foreign labor affect the employment of U.S. labor?

Reference no: EM131392053

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