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Obama wants limits on US company mergers abroad

Obama: Tax-Evading U.S. Corporations 'Are Just Gaming The System'

LOS ANGELES (AP) -- President Barack Obama is tapping into growing misgivings about tax-driven overseas mergers by U.S. corporations, issuing a new call to end the practice quickly and questioning the patriotism and citizenship of those companies.

The push comes amid a developing trend by companies to reorganize with foreign entities partly to reduce their tax payments in the U.S.

But Obama's election-year drive also coincides with increased attention to the issue by congressional Democrats, who are seeking to draw contrasts with Republicans and to portray them as too corporate-friendly.

Obama was scheduled to address the issue in remarks Thursday at a technical college in Los Angeles. Though he included a proposal to rein in such mergers and acquisitions in his 2015 budget, this marks a new, more aggressive focus on the issue by the president.

His administration began to ramp up attention to these transactions last week with a letter from Treasury Secretary Jacob Lew to House and Senate leaders. Lew said such deals, known as "inversions," "hollow out the U.S. corporate income tax base."

In his remarks, Obama was expected to call for "economic patriotism." White House officials said Obama would declare that those companies that engage in inversions are in effect renouncing their U.S. citizenship in order to shift their profits overseas.

Obama is urging Congress to enact legislation that is retroactive to May, arguing that will stop companies from rushing into deals to avoid the law.

Republicans and some Democrats, however, prefer to make those changes as part of a comprehensive overhaul of the corporate tax code that would also lower corporate tax rates and reduce the incentive for companies to seek out countries with lower levels of taxation.

Under such inversion deals, U.S.-based, multinational companies can lower their tax bills in part by combining with a foreign company and reorganizing in a country with a lower tax rate. The United States has a 35 percent income tax rate, the highest in the industrialized world, and it also taxes income earned overseas and then brought home.

Republicans such as Sen. Orrin Hatch of Utah say the U.S. first must change its policy of taxing income earned abroad.

Under current law, shareholders of a U.S. company that merged with an offshore entity would have to own less than 80 percent of the combined entity to take advantage of a lower foreign tax rate. Obama's budget proposes slashing that cutoff to 50 percent.

Administration officials estimate the deals, if allowed to continue, will cost the U.S. Treasury $17 billion in lost revenue over the next decade.

"We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes," Lew said in the letter.

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1000|Char. 1000  Char.
MATT LEUCK July 24 2014 at 11:42 PM

Any company has every right to avoid taxes, it's tax evasion that is illegal. How can a man who has never worked a day in his life advise folks that work for a living and have a choice of the taxes they must pay.

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42 replies
LoadHarvester July 25 2014 at 12:43 AM

I love the idea of Obama questioning other peoples' patriotism. It's hilarious coming from this man who hates his own country.
Just because he wants something doesn't mean he's going to get it.

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14 replies
Tina July 25 2014 at 12:07 AM

If this president would quit driving companies overseas, by penalizing them, and instead make it more profitable for them to remain on US soil, and deeply tax imported goods from places like China, companies would come back, hire more workers, and we wouldn't have inferior and often dangerous Chinese products on every shelf of almost every store. Hint, Obama, if you make it more profitable for US companies to remain incountry, they will hire more Americans to work here in this country. This is a no-brainer.

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31 replies
Jeannette July 25 2014 at 12:11 AM

Lower corporate tax rates (the highest in the world) and the problem is solved, but Obama would rather dictate to everyone.

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11 replies
jnel713 July 25 2014 at 12:31 AM

Obama just can't confiscate enough of other peoples money to give to the takers and moochers that is his base.

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15 replies
bill_jones86 July 25 2014 at 12:48 AM

obama is a disgrace.

Flag Reply +92 rate up
9 replies
joe101553 July 25 2014 at 1:00 AM

Hey hypocrite-In-Chief Odumbo...perhaps you should have a meaningful conversation
with your good buddy, Jeffery Immelt (GE's CEO), who parked $108 billion overseas to avoid paying taxes.

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6 replies
robtpopp July 25 2014 at 12:42 AM

Obama uses the IRS to punish his political enemies. Who is he to question the patriotism of companies who actually follow the law???

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5 replies
snrar July 25 2014 at 12:23 AM

If he was a patriot he would resign as of yesterday !

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4 replies
moooooooooochelle July 25 2014 at 12:09 AM

You will obey me while I lead you
And eat the garbage that I feed you
Until the day that we don't need you
Don't got for help...no one will heed you
Your mind is totally controlled
It has been stuffed into my mold
And you will do as you are told
Until the rights to you are sold
I am gross and perverted
Im obsessed n deranged
I have existed for years
But very little had changed
I am the tool of the government
And industry too
For I am destined to rule
And regulate you
I may be vile and pernicious
But you can't look away
I make you think Im delicious
With the stuff that I say
I am the best you can get
Have you guessed me yet?
I am the slime oozin out
From your president

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9 replies
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