else pay 50% flat tax on your business income , what will you do ? Will it bring down freelance industry as a whole ?
It depends. In some instances, you could still save money even after paying a 50% tax rather than paying many times more for the same work to a local freelancer.
Its not really a 50% flat tax, but being unable to take deductions would dramatically boost the tax bill. I would guess that when you take the difference in net cost , the hassles of working with employees who are not onsite, who are in a different time zone, with cultural and language barriers, hiring local employees will start to become a lot more attractive. It's kind of like levying a giant import tax on all imports, though in this case, the import is labor. I can see several results from this. 1) Large outsourcing countries like India are going to be seeing a LOT less work from America. 2) Programmers in America who are here legally and have a right to work are going to see more demand for their services, and based on the rules of supply and demand, a jump in pay. 3) The cost of software development, or anything else that relies on imported labor is going to go up. Sure this may damage Mr. Obama's fan base abroad in certain countries, but American workers should be thrilled about it. Europe showed us long ago that protectionism is the best way to fuel a robust economy, and Mr. Obama understands this.