The Briefing Room
General Category => Politics/Government => Topic started by: mystery-ak on July 24, 2014, 11:18:10 pm
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http://thehill.com/policy/finance/213271-obama-to-call-for-action-on-offshore-tax-deals (http://thehill.com/policy/finance/213271-obama-to-call-for-action-on-offshore-tax-deals)
By Bernie Becker - 07/24/14 05:17 PM EDT
Lashing out at what he called “corporate deserters,” President Obama on Thursday increased the pressure on Congress to approve legislation targeting companies that change their address to slash their U.S. tax bill.
Obama, speaking at a technical college in Los Angeles, said corporations were taking advantage of a loophole not available to average workers — and in the process, forcing the middle-class to take up more of the tab for infrastructure and job-training programs.
“I don’t care if it’s legal. It’s wrong,” Obama told the California crowd. “You don’t get to choose the tax rate you pay. These companies shouldn’t either.”
Obama pressed Congress to enact a measure making it impossible for a U.S. corporation to swallow up a smaller foreign company in order to avoid paying U.S. taxes.
In the process, Obama echoed his Treasury secretary, Jack Lew, who last week called for a “new sense of economic patriotism.”
Obama’s comments put an even larger spotlight on the practice known as inversions, an issue that meshes well with the economic populist tone that Democrats are taking this election year.
The White House is echoing the push from congressional Democrats to enact anti-inversion legislation retroactive to May, and has brushed aside Republicans who say the cross-border deals should be dealt with in tax reform.
Tax reform, Obama said, is “going to take some time,” while the recent rash of inversions illustrates that Congress needs to act to stop those deals now.
“You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers,” Obama said.
Congressional Democrats have been pounding the inversion issue since May, when the pharmaceutical giant Pfizer attempted to merge with AstraZeneca, a British competitor.
Since then, a string of other prominent companies, including the pharmacy chain Walgreen, have openly discussed shifting their legal address abroad, on top of the close to 50 companies that have inverted in the last decade or so.
Less than a week ago, the pharmaceutical company AbbVie closed the largest inversion yet — an almost $55 billion deal to merge with an Irish competitor.
But while Democrats clearly see inversions as a political winner, top lawmakers in the party also acknowledge they face an uphill climb in getting legislation passed this year.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) said Thursday that he was working with fellow tax writers, including his panel’s top Republican, Sen. Orrin Hatch (Utah), to try to clinch a bipartisan inversions deal.
But Sen. Charles Schumer (N.Y.), a member of that committee and Democratic leadership, said that sort of legislation was “a little too complicated” to clear the panel before the upcoming recess.
“I would hope right after,” said Schumer, who has also stressed that he doesn’t think the leading Democratic proposals on inversions go far enough.
Congressional Democrats have largely embraced a proposal from Obama’s budget that says that the government would continue to consider a merged company American for tax purposes if at least half of the shareholders come from the original U.S. business. Sen. Carl Levin (D-Mich.) and Rep. Sandy Levin (D-Mich.) have both introduced legislation along those lines.
The current threshold, set by anti-inversion legislation in 2004, is 80 percent. Hatch has said he’s open to a more targeted measure but won’t back retroactive legislation. Even some Democrats have also noted they think the problem would be better dealt with in tax reform.
“I don’t know that there’s going to be anything passed even this year,” Senate Majority Whip Dick Durbin (D-Ill.) told reporters after Lew briefed Democrats at a Thursday lunch. “There’s a need for it.”
Most congressional Republicans have stood firm against any targeted inversion legislation, instead saying the problem illustrates how badly the entire tax code needs to be rewritten. The real issue, they say, is the U.S.’s 35 percent corporate tax rate.
“I don’t think trying to do something that might be patchwork or put together haphazardly is the way to deal with this,” Rep. Charles Boustany (La.), a senior Republican on the House Ways and Means Committee, told reporters this week. “The fact of the matter is that our tax code has made U.S. companies relatively less competitive.”
On Thursday, senior White House officials said Congress enacted retroactive legislation the last time they dealt with inversions a decade ago.
They added that companies that reincorporate abroad for tax reasons often change little about how they do business and remain heavily reliant on other U.S. resources, like education systems and infrastructure.
A White House official noted that, given that some smaller nations have slashed their tax code for corporations to basically zero, any overhaul of the tax code would need to contain a tough inversion proposal.
With that in mind, the White House official noted, Washington might as well start taking on inversions now — a step, the official said, which would also stop any “bandwagon effect” caused by the recent rush of inversions.
“There’s more safety in numbers,” the official said. “We should be acting as quickly as we can. That will buy us more time and space.”
— This story was first posted at 3:52 p.m. and has been updated.
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Given the nature and history of this country, which was founded on a tax revolt, aren't the patriots the ones who do everything in their power to AVOID the onerous taxes imposed upon them by a tyrannical despot?
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“I don’t care if it’s legal. It’s wrong,” Obama told the California crowd. “You don’t get to choose the tax rate you pay. These companies shouldn’t either.”
Great. Then use your pen and your phone and change things, Wimp. Then see what happens. :tongue2:
These companies are in it for their stockholders, and will do whatever it takes to increase their stock value and earnings.
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Corporations are moving out of the U.S. because it has THE highest corporate income tax rate in the world and now this POS wants to prevent them from leaving!
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Disgusting. Why don't we just outlaw private corporations and make everyone work for the gov't? That's true communism, and we wouldn't have to fuss around with discussing outdated concepts like freedom and the Constitution anymore.
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What a piece of sh*t.
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this must be on his list of things to do before he leaves office I bet.
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Corporations across the globe have been using tax advantaged jurisdictions for decades.
The Caribbean, the Channel Islands are just a couple examples. The US came relatively late to the game, but come it did.
Taxes can be deferred (not eliminated) if the profit comes from an offshore source, AND if the profit is reinvested offshore.
Build a plant in South Africa, hold some of the profit in a South African company entity, don't send it to the US (repatriation). In this example, the profit is NOT taxed until it is remitted to the parent, as a dividend of profit.
Similarly, if South Africa had a high tax rate, a different approach would be used; e.g. an entity in a low/no tax jurisdiction, like Bermuda, Jersey (English Channel Islands), etc.
This method is stretched further thusly--the offshore entity does NOT remit a profit dividend to the US parent which would trigger a taxable event, but instead loans the money to the US parent, which does not of itself trigger a taxable event.
When you see a US which owns foreign real estate, it is often from using these tax opportunities. If the previously discussed profits get invested, they remain deferred. So build a regional headquarters overseas.
The issue under discussion by Obama is taking away this ability to defer, not avoid, taxation on foreign source profits. And secondly it involves discussion of reducing the US corporate tax rates.
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The ass clown who wouldn't honor the Flag or the National Anthem talking about Patriotism. That's a bit rich!
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The ass clown who wouldn't honor the Flag or the National Anthem talking about Patriotism. That's a bit rich!
Yeah! Just a bit! :patriot:
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“I don’t care if it’s legal. It’s wrong,” Obama told the California crowd. “You don’t get to choose the tax rate you pay. These companies shouldn’t either.”
He gets to pick and choose what laws he obeys so why can't corporations? :peeonobama:
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This is yet another Obama strawman that he has made to take potshots at, and further demonize Republicans, nothing more.
Obama is throwing everything he can at the wall in the diminishing hope something will stick to something besides him.
:smokin:
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What a piece of sh*t.
You shouldn't be so demeaning of sh*t. :silly:
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Corporations are moving out of the U.S. because it has THE highest corporate income tax rate in the world and now this POS wants to prevent them from leaving!
Directive 10-289 (http://www.conservapedia.com/Directive_10-289) is almost here.