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Hooked By The H1-B / L1 Visas IT Industry "Prestigious Ones" Turn To Offshore "Tax Evasion"

There is an ongoing effort in the IT industry mainly on the part of  the “Prestigious Ones” to bring into the USA foreign nationals to work in the IT industry.  These 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, that result in a lower tax rate, or possibly are exempt from Social Security and Medicare taxes and the employers save a similar amount as there is no matching by the “employer”. In addition the foreign nationals are not paid prevailing wages as 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.  

American Corporations 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 but in reality due to the immense numbers, really represent 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 have been prostituted to the point that a foreign corporation (from India ) established operations in the USA and becomes the major user of H1-B visa to the degree of representing 30% plus of all H1 visas.  These foreign corporations bring the H1-B individuals to work in projects so that when they are repatriated to their country of origin will have worked for an American Clients  that would have been hooked into the cheap labor and will feel the need to outsource the jobs to that country.

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 among ourselves as to how we are going to handle and supervise the original objectives of H1-B and L1 visas.

During this period many will be surprised to find that the individuals working under the USA1 category (Americans) will turn to be the best solution for business when the laws are being followed.

We recommend bypassing the IT industry “Prestigious Ones” and having the consultant and the end client contract directly as supported by Peningo Systems Inc.