Corporate Tax Incentives for Hiring workers on H1-B and L-1 Visa, Pay little to “NO” Social Security or Medicare Tax

Hiring H1-Bs for DummiesThere is an ongoing effort in the IT industry mainly on the part of the Larger IT Service Organizations to bring into the USA foreign nationals to work in the IT industry. This importing of personnel under the H1-B and the L1 visas are basically motivated by cost savings, as the individuals under those visas are either paid a lower salary than Americans. This results in a lower taxing base, or possibly an exemption from Social Security and Medicare taxes. The employers save a similar amount as there is lower to no matching taxes by the “employer”. In addition the foreign nationals are not paid prevailing wages, that is required by law.

Each State labor department establishes what is supposed to be prevailing wages and based on our 30 years experience in the industry those prevailing wage surveys runs about 50% to 70% below the real prevailing wages.

Some American Corporations have set up branches in India and then import those Indian employees under the L1 visa which is supposed to exist for the purpose of providing USA based training to foreign nationals of those corporations. In reality, due to the immense numbers of L1s in the USA, this represents another source of cheap labor and evasion of USA laws.

The purpose of the H1-B is to facilitate to American Business the importing and use of exceptional talented individuals that bring to America knowledge, which is exceptional, or so rare that it could not be found in our IT technical labor market.

Due to the economic incentives mentioned, and the lack of supervision by our government, the H1-B and L1 programs have been prostituted to the point that a foreign corporation (from India ) established operations in the USA and have become the major user of H1-B visa, to the degree of representing 30% plus of all H1 visas. Many of these foreign corporations bring the H1-B individuals to work in projects in the US, while also working on selling to the US based client the Outsourcing of the work to India. The irony here is that the H-1 Visa program was designed to bring individuals that would contribute to growth of our economy and growth of jobs, however the H-1s are now used as front line soldiers by the Indian based Outsourcing firms in the marketing to US clients to Outsource Jobs out of America.

We at Peningo feel that the situation of the H1-B and L1 visas have become so corrupt that the only solution is to eliminate them immediately, and have a period of dialog amongst ourselves as to how we are going to handle and supervise the original objectives of H1-B and L1 visas.

If you view the video regarding a immigration law firms practices on the H1-B process below, you’ll see why we need to freeze on the H1-B process and what we mean by corrupt !!!!!

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

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