Obama to call for tax ‘loophole’ closure
07/24/2014 10:29 AM
07/24/2014 10:57 AM
LOS ANGELES - As he closes out a three-day West Coast fund raising trip, President Barack Obama will call today for closing what the White House calls “one of the most unfair tax loopholes” that allows U.S. companies to avoid paying taxes.
Obama will be calling for an end to what’s known as corporate “inversions” -- when large corporations merge with smaller foreign companies and shift their corporate residence out of the country. The White House charges that they keep their headquarters, and most of their business, inside the United States, but do the move to avoid paying taxes in the U.S.
Obama, a White House official said, “will make clear that these companies are essentially renouncing their American citizenship so that they can ship their profits overseas to avoid paying taxes – even as they benefit from all the advantages of being here in America.”
Obama has called for closing the loophole in his budget and notes there are bills in the House and Senate to address the measure. White House officials said he supports making a fix retroactive to this May to avoid incentives for companies to rush to take advantage of the “loophole.”
The White House estimates the inversions could cost the U.S. as much as $17 billion in lost tax revenue over the next decade.
Obama will deliver his remarks at Los Angeles Technical College, which helps the unemployed pursue health care professions. Obama will argue that the money lost to the tax loophole could be better spent investing in similar job training programs. He’ll also make a pitch for the move in an interview on CNBC -- to be taped at the college and to air at 5 p.m.
Treasury Secretary Jack Lew wrote to Senate Finance Committee chairman Ron Wyden, D-Ore., last week, calling for a “new sense of economic patriotism” to prevent U.S.-based companies from performing the “inversion” transactions.
White House officials declined to name any such transactions, acknowledging “sensitivity in singling out in specific businesses,” but business publications have suggested the change could prevent “inversions” by such firms as U.S. drug makers AbbVie and Mylan.
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