Hi Bob:
Read your article "What's All This Compensation Stuff, Anyhow? (Part III)" (electronic design, July 10, p. 147). Very interesting. The U.K. is introducing 150,000 "fast track" visas for foreign IT workers (largely drawn from India and Asia) to attempt to fill some of the shortfall in qualified technical staff. Some of our government ministers have even been over to the U.S. attempting to repatriate Brits who emigrated years ago.
Bizarrely, at the same time, they've introduced new tax legislation called "IR35," which is making it impossible for small IT, engineering, oil/gas, aerospace, and other "personal service" companies to remain in business by "deeming" (the government's word) that 95% of company income is in fact the personal salary of anyone with more than a 20% stake in the company. And, that amount is then taxed as if they were a regular employee of the end client. Plus, they have to also pay the 12.2% Employer National Insurance contribution—but they're not eligible for any of the usual employee benefits.
Nonshareholding employees of affected companies, therefore, have to be paid out of already taxed income, (i.e., the director's "deemed" salary), upon which they have to then pay their own income tax and national insurance contributions. (JEEEZZZ!!!! /rap)
Overall, this amounts to taxation at a rate of 74.5%. Large companies aren't affected, and lawyers are exempt. Both Tony Blair and his wife are lawyers—what a surprise! 66,000+ small businesses are expected to close as a direct result (government's figure). As many of these are young, mobile, Internet-aware professionals, they're quite naturally fleeing the country in droves. About 40% of contractors have already left or are planning to leave in the next year.
This is decimating the "e-conomy" of the U.K. and has paralyzed the IT and engineering sectors. Because the rules are so arcane, even the Treasury and Inland Revenue can't understand them to the point of giving clear advice. They have even admitted that the measure introduces double and triple taxation in certain cases, but they say "tough—it's the Law." The government estimates around 500 million increase in tax take in the first year, due to the new measure, but it costs 1 billion to implement the new revenue system, and 1.2 billion corporation and other taxes are heading overseas as a result. So, they have actually lost around 1.7 billion—quite apart from the knock-on effects of turning the U.K. into an IT and engineering wasteland.
Just to put the icing on the cake, the government has just implemented its Removal of Individual Privacy (RIP) Bill 2000, whereby all e-mail and web traffic is routed to the government's agents for monitoring. ISPs are required to install black boxes on their networks to facilitate this. Encryption is outlawed. Failure to disclose a plain-text version of an encrypted file is punishable by two years in prison, and disclosing that you have been asked for a plain-text version of an encrypted file gets you five years. A large number of ISPs are moving offshore, and inward investment to the country is on hold because few international companies want their currently private, secure e-mail exchanges with other offices to be snooped by the U.K. government. (Bizarre! /rap)
So, we're leaving. And where can we go? Europe's good, but the U.S. is better —cheaper petrol, cheaper food, cheaper housing, cheaper computer equipment, cheaper Internet access, more space, more freedom, better governmental system. Watch out, the Brits are coming! (Haven't you heard that one before?) This time, we would very much like to live quietly with you folks.
Simon Banton
via e-mail
We would love to have you as neighbors and co-workers, but watch out for the U.S. bureaucrats when they open the floodgates to EE and IT engineers from Asia and other low-rent places. Best wishes!—RAP
Dear Bob Pease:
I'm a professor at the University of Texas. I am of the vacuum-tube generation and have been teaching linear electronics and instrumentation for over 30 years. Your article "What's All This Compensation Stuff Anyhow? (Part III)" just struck a chord and resonated with my thoughts. I'm a proud engineer and I like to keep the profession respected. Did you ever hear that the AMA has imported physicians to our country, even though there's a shortage of physicians in some locations? I think the answer is clear. (One guy said that the AMA did and does let in a lot of foreign doctors, but I don't have to believe that. /rap)
Another issue is that the basics of linear discrete electronics are being buried under software and computers. I have nothing against software and computers, but I hate to see how today's students don't even know what biasing of a transistor means! If this trend continues, I don't know where the electrical engineering profession will be going. (Very simple: it's going all software. Straight to hell in a handbasket. /rap) Maybe we have to import some more engineers who have the basic knowledge.
Samir H. Manoli
via e-mail
Hello, Samir. NSC has several dozen design engineers working in design centers overseas. MOST are working and living in their home countries. And many are working on linear ICs.—RAP
All for now. / Comments invited!
RAP / Robert A. Pease / Engineer
[email protected]–or:
Mail Stop D2597A
National Semiconductor
P.O. Box 58090
Santa Clara, CA 95052-8090
