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'No' to Bangalore, 'Yes' to Buffalo -- Barrack Hussein Obama

This is wisest thing Obama has done. This will encourage to keep more jobs at home. In current economic situation "globalization"as we knew it is dead. Rather its regional approach that is gaining momentum. So anti globalization arguments will not hold water.

As far US corporation moving out of US and being competitive, that is far fetched argument. US company will remain where they are and no country in the world con provide better alternatives and US can always and are providing fiscal incentive to its companies which no other country can. Power of printing money.

Only thing indians can do (beside complaining) lower their wage. I heard newly grad MBA in india now can be hired for less than 10k indian rupee.

Believe me, I work on software business modeling & am directly involved in such outsourcing projects. I know this stuff from inside & out. Let's list the loop holes in Obama strategy -

1. Nothing happens to already outsourced CONTRACTS. Those companies can outsource more business without any more restrictions. And most of major US companies are in this category.

2. This is applicable after 2011. Obama hopes to be recovering by that time. So if all goes well, this may never be implemented, even after passing in congress.

3. As I mentioned, 'indirect' outsourcing by the vendor does not have to pay extra taxes. Again, such outsourcing constitutes major part of outsourcing business.

4. India specific. India is now probably US's the most favorite outsourcing destination. Business flows in from other destinations like Philippines, Brazil etc. I myself have been involved in some projects where we snatched a big chunk of business from above 2 countries.

And most of all - a business which needs cost effectiveness & can not be outsourced, is as good as closed. So nothing is going to hit India in near future in terms of outsourcing.
 
As long as economy = power

And

Politics is pursuit of power

Economy wins. We've seen it all along, we'll see it again. India's outsourcing industry is not a textile sweatshop. They are innovative, educated, talented and most importantly have a humble background. They'll survive, remodel, reinvent. American companies were not doing anyone favors by outsourcing, they were doing what was necessary to remain competitive, and that has not changed.
 
Stupid!!!...

What Bangalore has done is to save thousands of dollars for the American people and has done huge in reducing the carbon footprint of the world.

Barack Obama must first start making toothpastes,coffee mugs, or maybe just chocolates in America. Imagine the pollution by transport of a toothpaste manifactured in the other part of the world. That would create much more employment in America that Bangalore and Buffaloe put together.:lol:
 
Obama's push against outsourcing alarms tech giants
By Brandon Bailey


Mercury News

Posted: 05/02/2009 12:33:22 PM PDT
Updated: 05/05/2009 02:23:39 AM PDT


In the tech industry's first major disagreement with the Obama administration, Silicon Valley companies are voicing alarm about a proposal that could require corporations to pay billions of dollars in U.S. taxes on foreign earnings.

The administration wants to change a long-standing law that allows American companies to defer paying these taxes as long as the funds are kept overseas. That could have a big impact on a number of U.S. corporations, especially tech giants such as Hewlett-Packard, Cisco Systems and Oracle, which report that overseas markets account for half or more of their sales.

"It's probably our biggest concern right now. Certainly, it's the biggest issue where we disagree with the Obama administration," said Ralph Hellmann, senior vice president of the Information Technology Industry Council, an industry lobbying group.

"On a Richter scale of 1 to 10, this is about a 20," added Carl Guardino, CEO of the Silicon Valley Leadership Group, who is leading a delegation of valley executives to Washington this week. They plan to discuss the deferral proposal and several other issues with federal officials and congressional leaders.

Currently, many big companies avoid paying U.S. taxes on revenue from foreign subsidiaries by reinvesting the money overseas, either by parking cash in various accounts or by plowing it back into foreign operations.

Without the deferral provision, for example, Google might have been

required to pay an additional $1 billion last year on a tax bill that amounted to roughly $1.6 billion, according to a regulatory filing made by the company.

While the standard U.S. corporate tax rate is 35 percent, HP reported that it cut 16.9 percentage points from its effective tax rate last year by paying lower foreign rates, instead of U.S. taxes, on income from overseas operations.

Level playing field?

Industry representatives say the provision gives them a level playing field on which to compete overseas against foreign companies, since many countries have a lower corporate tax rate than the United States. They argue that foreign sales are increasingly important in a global economy, and that healthy overseas operations help support domestic jobs.

Critics of deferral have charged that it encourages companies to move jobs and shift income overseas, and that it deprives the government of significant tax revenue at a time when the recession and successive bailouts are putting huge demands on the federal budget.

"It facilitates a lot of corporate tax avoidance," said Robert McIntyre of Citizens for Tax Justice, a liberal research group that scrutinizes corporate tax practices. He said some companies have been known to shift patents or other assets to foreign subsidiaries to avoid U.S. taxes on the resulting revenue.

While the administration has not discussed any specifics, President Barack Obama's preliminary budget documents state that he plans to raise $210 billion over the next 10 years through better enforcement and reform of tax policies governing U.S. business activities overseas, including deferral.

That's a relatively small amount compared with total overseas profits, according to Stanford University professor Joseph Bankman, an expert on business and tax law. He said the figure suggests Obama will more likely push for incremental adjustments rather than an outright elimination of the policy.

The prospect has already worried some business leaders. Guardino said his group wants to make its arguments "before the concrete dries" on any specific proposals.

It's the first big difference of opinion between the new administration and the tech sector, which has widely praised Obama for embracing science and innovation, and for creating the posts of chief technology officer and chief information officer for the government.

"We've worked with him on the stimulus package and other issues, but this is certainly a problem for us," Hellman said.

Corporations tend to guard the details of their tax returns, but a sense of the potential impact can be gleaned from regulatory filings: Cisco lowered its effective tax rate by 16.1 percentage points through deferral, while paying income taxes of $2.8 billion in 2008. Oracle cut $569 million from its U.S. tax bill, which ended up at roughly $2.3 billion, for an effective tax rate of 29.5 percent.

"Over 50 percent of our sales are outside of the U.S., and the profits we make outside of the U.S. are used for non-U.S. operations," Cisco said in a statement. If forced to pay U.S. taxes on overseas income, the company said, the additional cost "would adversely impact our ability to invest and grow our business in the U.S." and to compete against foreign companies that aren't subject to the same tax.

In general, U.S. companies pay taxes to a foreign country on income generated within its borders, but foreign rates are often lower. If U.S. companies bring the revenue home, they must pay U.S. taxes, although they can deduct foreign tax payments from the amount they owe here.

Many companies choose to keep foreign earnings overseas. In documents filed with the Securities and Exchange Commission, for instance, HP said it has accumulated $12.9 billion from foreign subsidiaries that it planned to reinvest "indefinitely" overseas. Cisco said it has $21.9 billion and Google $7.7 billion.

'Repatriate' funds

Google, HP and Oracle declined to comment on deferral. But business groups have argued that hundreds of billions of dollars in overseas revenue could help stimulate the U.S. economy if companies were allowed to "repatriate" the funds at a reduced tax rate. U.S. Sen. Barbara Boxer, D-Calif., backed legislation earlier this year that would have temporarily lowered the tax rate to 5.25 percent for overseas earnings repatriated within a year.

The legislation was defeated, however, after opponents cited research that found few U.S. jobs were created after a similar tax holiday in 2004.

Tech Firms Critical Of Obama?s Tax Proposal - Technology News - redOrbit
 
Pakistan will also get affected by this decision. I think we should develop IT culture in our local businesses so that we can get projects locally. At the moment local projects will not pay us as much as foreign (especially US projects).Utilization of technology in every field is extremely necessary for our IT industry.
 
He is the president of USA so therefore Americans need to be taken care first before anyone else. Americans are suffering due to Bush f**ked up policies that his ****** rich cronies out source all the job to India to get even more rich. All this jobs need to be brought back to USA so that people here can have better life. There are many graduates are working low paying jobs and thats not even funny no more. :usflag:

Then after the dark came the Hero with a ray of Hope for the American common man. The renowned Harvard Law School graduate is indeed a Hero to the American common man. The Columbia University ex-Student is really reliable from the point of view of an American common man. The jobless homeless American has now got somebody to rely on. I love you Obama. :smitten::usflag:

Obama Zindabad.
Buffalo Zindabad.
 
Indiatimes - Infotech

Obama plan upsets Indian techies
6 May, 2009, 1430 hrs IST,IANS

NEW DELHI: Indian IT professionals slammed President Barack Obama's move to end tax incentives for US companies that ship jobs to countries like India, saying it will neither benefit the US nor its corporate sector.

“Obama's latest move was expected, but unwelcome at a time when Bangalore's IT and BPO sectors are already reeling under the global economic meltdown,” said Padma Nair, 26, an IT-professional working for a Bangalore-based American company.

“Obama's new policy is not going to benefit anyone, neither the outsourcing companies nor the country the job is outsourced to. The cost saved in outsourcing is higher than that saved by tax exemption,” Nair said.

Expressing a similar view, Shankar Banerjee, 25, a quality analyst working for another American IT company, said if Obama's proposal is pushed through, it will hit business coming India's way and many Indians would lose their jobs.

“IT and BPO companies in India have already suffered due to the slowdown. A lot of people have lost jobs. Obama's latest move will cause more problems,” added Banerjee.

The comments came after President Obama said that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps.

“It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens.

“I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”

According to the National Association of Software and Services Companies (Nasscom), the US accounts for about 60 per cent of India's software services export revenue. Bangalore-based firms account for one-third of this.

A recent study by the association, conducted along with McKinsey, shows the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

American IT companies that have set up offices in Bangalore include Accenture, Microsoft, Amazon, AOL, Cisco, Dell, IBM and Intel.

An estimated 600,000 people are employed in Bangalore's software and outsourcing sectors. And industry professionals say many could lose their jobs following Obama's latest move.

UNITES-Professionals India, a trade union for IT enabled services sector, predicts 50,000 employees in India will be handed the pink slip over the next few months. Bangalore, hailed as India's Silicon Valley, could be the worst affected.

Concurred Sumana Prasad, 32, an IT employee working for an Indian company, 'The slowdown has already hit Bangalore's IT and BPO companies. Obama's latest step will affect more people.”
:smokin:
 
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May 06, 2009,

Business groups in the US have assailed the proposal.

Indian IT services providers do not appear perturbed over the proposal of US President Obama to eliminate a loophole that allows US firms to avoid paying tax on profits earned overseas.

They say that the proposal will primarily impact US-headquartered companies like IBM, Hewlett Packard, Microsoft and Oracle that have overseas operations in countries like India.

Most large American companies earn more than 50 per cent of their revenues from markets outside the US and will be affected by the proposed tax reforms.

For instance, IBM has over 70,000 employees in India and more than 55 per cent of its revenue comes from outside the US. So, too, for Hewlett Packard, which has 30,500 employees in India.

Intel, the world’s largest chip maker, counts emerging markets as the next growth area. And as part of increasing their hold in these markets, all US IT firms have invested both in terms of finance and people.


“The current proposal, as we understand, is to close corporate tax loopholes for US multinational corporations. We do not believe it has anything to do with IT outsourcing done by US corporations,” India's second-largest IT services provider, Infosys Technologies, said in a statement.

Raman Roy, founder of Quatrro BPO Solutions, said: “These new tax proposals will generate incremental revenue for the US government because it will be taxing the profits of overseas companies. Captives will benefit from this move. However, these benefits will be short-term. In the long run, it might make us less competitive.”

“For Indian IT firms, there is no immediate impact in the light of the recurring protectionist voice coming from the US. But the tax reforms that are being talked about have more to do with the global operations of US firms,” said Ganesh Natarajan, CEO and MD, Zensar.

The current law in the US states that “any income that is earned outside the US is not taxed until such time it is brought back into the US”. The Obama proposal aims to alter that to raise the revenues of the US government. Obama said removal of tax deductions to firms that earned profits in countries with low tax rates and closing other loopholes would net $210 billion in additional tax collections over the next decade.

The tax reforms (announced yesterday) have only been proposed and there will be an extended debate on these before they can be implemented, as they require existing laws to be changed, according to software body Nasscom.

Business groups in the US had assailed the proposal, arguing that it would subject them to far higher taxes than their foreign competitors must pay and ultimately endanger US jobs, it added.

As far as India goes, global companies that earn profits here are subject to a tax rate of 33.9 per cent (including surcharge and cess) and the impact of the proposed reforms on them would be marginal.

Analyst firm Zinnov said the proposed revision in tax breaks was counter-intuitive to organisations who were looking at India strategically for long-term growth.

“If the Obama government thinks that outsourcing is a ‘reversible phenomenon’ and cutting tax breaks will help create jobs in the US, then the thought process is quite short-sighted and needs lot more clarity. Consequences of such a policy spanning across different countries and verticals can be unimaginable. Its complexity and implications can be much larger than the current recessionary scenario that we are dealing with,” said Chandramouli, director, Advisory Services, Zinnov.

Others, especially in Japan and Europe, are moving to a territorial system that taxes only corporate profits earned within their borders and the latest US proposals are contrary to the trend, notes Nasscom. This might actually end up reducing competitiveness of US companies with global operations when compared to their European and Japanese counterparts, it concluded.

Obama's tax proposal to hit US companies rather than Indian IT sector
 
Obama Unveils Plan to Close Tax Loopholes - Presidential Politics | Political News - FOXNews.com

Obama Unveils Plan to Close Tax Loopholes
President Obama's plan would eliminate certain tax deductions for companies and consider U.S. citizens who use tax havens such as the Bahamas or Cayman Islands guilty of violating tax laws.


President Obama announced Monday a plan to prevent U.S. companies using offshore banks to deferr tax payments, saying that the effort to "shelter" money creates an unfair advantage to U.S. companies and amounts to evasion.

The president also called for more transparency in bank accounts held by Americans in tax havens such as the Cayman Islands.

"The way to make American businesses competitive is not to let some citizens and businesses dodge their responsibility, while ordinary Americans pick up the slack. Unfortunately, that's exactly what we're doing," Obama said.

"If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly," he continued.

Under the plan, companies would not be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.

The current law, Obama said, "says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York. "

Obama said that his plan would generate $210 billion in new taxes over 10 years and "make it easier" for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in the federal deficit, expected to be $1.2 trillion in 2010.

He said the government also is hiring nearly 800 new tax agents "to detect and pursue American tax evaders abroad."

The U.S. Chamber of Commerce issued a statement saying that changing the provisions would hurt job prospects.

"The United States is the only major industrialized country which double taxes the overseas earnings of our companies. Since other countries don't subject their companies to double taxation, U.S. companies need deferral to stay competitive in the global marketplace," said the chamber's chief economist Marty Regalia.

"When you limit deferral, you limit the ability of U.S. companies to compete, you impede growth in the U.S. economy, and you cause the loss of jobs -- both at the companies directly impacted and companies in their supply chains," he said.

Congress may resist significant portions of Obama's plan, saying it hurts U.S. business.

"I certainly support reforming the tax system and agree with the President that we must crack down on tax evasion through the use of tax shelters or abuse of offshore bank accounts. But as to the larger part of his proposal: I cannot endorse a plan that gives preferential treatment to foreign companies at the expense of U.S.-based companies and the 52 million people they employ," said Senate Minority Leader Mitch McConnell, R-Ky.

Senate Finance Committee Chairman Max Baucus, D-Mont., who supports the president's overall intention, said in a statement that more study is needed to see how American companies would be influenced by proposals that would modify companies' ability to defer tax on foreign earnings, foreign tax credits, classification of foreign businesses and offshore tax havens.

"I want to make certain that our tax policies are fair and support the global competitiveness of U.S. businesses. These policies must be designed to encourage economic growth and create good-paying jobs Americans need right now," he said.
 
Obama Talks about Creating Jobs in Buffalo | WKBW - TV Buffalo, New York | Local News

OBAMA TALKS ABOUT CREATING JOBS IN BUFFALO

WASHINGTON (AP) - President Barack Obama promised sternly on
Monday to crack down on companies "that ship jobs overseas" and
duck U.S. taxes with offshore havens.

It won't be easy. Democrats have been fighting - and losing -
this battle since John F. Kennedy made a similar proposal in 1961.
Obama's proposal to close tax loopholes was a reliable applause
line during the presidential campaign, but it got a lukewarm
response Monday from Capitol Hill. Sen. Max Baucus of Montana, the
Democratic chairman of the Senate Finance Committee, said the plan needed further study, even though similar ideas have been around for years.

The president's plan would limit the ability of U.S. companies
to defer paying U.S. taxes on overseas profits. At the same time,
Obama would step up efforts to go after evaders who abuse offshore
tax shelters.


Obama said his plan would raise $210 billion over the next 10
years, though no tax increases would go into effect until 2011.
That's an average of $21 billion a year, less than a 2 percent nick
in a federal budget deficit that is projected to hit $1.2 trillion
in 2010.


Lost revenue isn't the only problem, Obama says. He contends the
current system gives companies an incentive to invest overseas
rather than creating jobs in the U.S. "It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, N.Y.," Obama said Monday.

The business community argues the deferral system helps them
compete against foreign companies that pay taxes only in the
countries where they generate profits.

The bottom line?

"Nobody should miss the fact that this is about revenue," said
Raymond Wiacek, head of the tax practice at the law firm Jones Day.
"These companies have the money, and the U.S. government needs the money."


Obama also proposed a package of disclosure and enforcement
measures designed to make it harder for financial institutions to
help wealthy individuals evade taxes in overseas accounts. Obama said the government is hiring nearly 800 new IRS agents to enforce the tax code. :chilli:

"I want to see our companies remain the most competitive in the
world," Obama said at a White House announcement. "But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax
havens."


Obama's plan would impose billions of dollars in new taxes on
many of the nation's largest corporations, including Google,
General Electric, Hewlett-Packard, Intel and Johnson & Johnson, tax
experts said. But it falls well short of the broad overhaul of the
tax system that will probably have to wait until at least next year
- after Congress deals with health care and energy.

In exchange for the increased taxes some companies would have to
pay, Obama agreed to make permanent a research tax credit that
would provide firms about $75 billion in breaks over the next 10
years. The credit currently is to expire at the end of the year.
Obama has widespread support in Congress to crack down on tax
evaders who illegally hide assets in tax havens.
But he faces stiff
opposition - even within his own party - to increasing taxes on the
legal transactions of U.S. multinational companies.

"To the extent the president continues on the road of cracking
down on tax abuse, he can count on my support," said Sen. Chuck
Grassley of Iowa, the top Republican on the Senate Finance
Committee. "But if he's using tax shelters as a stalking horse to
raise taxes on corporations at the cost of U.S. jobs, he'll lose
me."

A coalition of business groups has already stepped up lobbying
efforts to kill attempts to increase taxes on overseas profits,
saying it would make American companies less competitive.
"We're talking about American jobs at American companies and
their ability to compete overseas," said John J. Castellani,
president of the Business Roundtable.

At issue is the way the U.S. taxes the overseas profits of American companies. Under current law, American corporations with subsidiaries in foreign countries can defer paying U.S. taxes on
the profits of those subsidiaries until the money is transferred
back to this country.


If companies leave the money overseas, where corporate tax rates in most countries are lower than in the U.S., they can avoid
American taxes on those profits indefinitely. If the money is
brought to the U.S., corporations can subtract foreign taxes
already paid.


The U.S. has a top corporate income tax rate of 35 percent,
which is among the highest in the developed world. However, most
corporate income is taxed at much lower rates because of deductions
and credits.

In 2004, large corporations paid an average effective tax rate
of 25.2 percent on domestic income, according to a Government
Accountability Office report last year. For foreign income, the
effective U.S. tax rate was about 4 percent, the report said. That
figure does not include taxes paid to foreign countries.

Obama's plan would:
-Prevent companies from writing off domestic expenses that help
generate profits abroad - until those profits are returned to the
U.S. and subjected to American taxes. For instance, administrative
tasks performed in New York for a London office would not be tax
deductible in the United States.

-Prohibit companies from receiving foreign tax credits on income
that is not subject to U.S. taxes.

-End a provision that lets U.S. companies legally shift income
from one foreign subsidiary to another, making the taxes they owe
to the United States "disappear."


Former President Kennedy failed to end the tax deferral system in 1961, despite telling Congress the U.S. could no longer afford it. The system also survived overhaul efforts in the 1970s and 1980s.

Rep. Charles Rangel, chairman of the tax-writing House Ways and
Means Committee, proposed a similar measure to limit the deductions of U.S. multinationals in 2007. But Rangel, a Democrat from New York, tied his proposal to lowering the overall corporate tax rate. On Monday, he welcomed Obama's plan. "For too long, our tax laws have rewarded companies that invest and keep their money overseas and turned a blind eye to the use of tax havens by the wealthy," Rangel said.
---
AP Technology Writer Michael Liedtke contributed to this report.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
 
Then after the dark came the Hero with a ray of Hope for the American common man. The renowned Harvard Law School graduate is indeed a Hero to the American common man. The Columbia University ex-Student is really reliable from the point of view of an American common man. The jobless homeless American has now got somebody to rely on. I love you Obama. :smitten::usflag:

Obama Zindabad.
Buffalo Zindabad.

How does it even remotely affect you? What do you understand of double-taxing and outsourcing? The fact that it involves India's economy, and you hate India's growing strength to the core?

Its startling how little sense you can make out of the word 'economy'. Bush, Clinton, were all Harvard Grads. How come they encouraged outsourcing? I'd prefer you continue to stick to your 'hindu-hating bravado'.

Pullout is not gonna be overnight. Its probably gonna take a year to happen. Even the legislation is not ready. Even if Obama comes up with a bill, it has to be approved by the congress. A similar bill was rejected by the Congress in 2004. Till then Americans wont be patient. World economy will probably recover by that time. And his theory will find little takers when America returns to capitalism.
Already companies have loathed the decision.

Infact HP brought 5000 American jobs to India this month.

Expressing a similar view, Shankar Banerjee, 25, a quality analyst working for another American IT company, said if Obama's proposal is pushed through, it will hit business coming India's way and many Indians would lose their jobs.

Precisely the kind of think that would give Communist a good night sleep. Why do you forget India enormous domestic potential that remains untapped? Several national services like Defence, Railways, Air-travel, can look to the availible IT boost.

Second reason that India wouldnt be much affected is because of the versatile talent. Indian IT companies are dealing with 400/500 Fortune 500 companies. And only about 200 of those are American companies. So again, dont start jumping before understanding what is being talked about.
 
Mr. Communist,

With this Obama tax plan, are you happy because India is going to suffer, or are you happy because US is going to Suffer? Or do you even Know What Obama is talking about!!!!:D
 
Mr. Communist,

With this Obama tax plan, are you happy because India is going to suffer, or are you happy because US is going to Suffer? Or do you even Know What Obama is talking about!!!!:D

He just looks at the word "India" and the word "suffer" and says "Darn, I love this thing, I have to post it with my favourite smilies".
 
Mr. Communist,

With this Obama tax plan, are you happy because India is going to suffer, or are you happy because US is going to Suffer? Or do you even Know What Obama is talking about!!!!:D

I am happy because the US Govt will be benefited, I am happy because the people of the United States will be benefited, I am not even least bothered about the fate of US multinational profit gearing corporations and over seas companies of Bangalore. Bhaar mein jaye...

I am happy because at least some of my American sisters and brothers who are now jobless and homeless and in great trouble will get jobs in Buffalo.
 
I am happy because the US Govt will be benefited, I am happy because the people of the United States will be benefited, I am not even least bothered about the fate of US multinational profit gearing corporations and over seas companies of Bangalore. Bhaar mein jaye...

I am happy because at least some of my American sisters and brothers who are now jobless and homeless and in great trouble will get jobs in Buffalo.

Hey, i also live in the States, and I am also jobless and homeless, can you call Obama and fix my problems also, I am your brother afterall, with brown skin in all!!!:lol:
 
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