Obama to go on offensive against use of cross-border merges to avoid taxes

President Barack Obama plans to go on the offensive against companies that use cross-borders mergers to escape US taxes, accusing them of essentially renouncing their citizenship to shield profits.

Speaking in Los Angeles, the president said companies that use corporate inversions benefit from the economic advantages of being in the US, while adding to the tax burden of middle-income families.

Facing multiple foreign policy crises and a slow economic recovery, the president is turning to domestic issues and seizing on tax fairness as a campaign theme to help Democrats in the November congressional elections.

At fundraisers on the West Coast this week, Mr Obama has described Republicans as protecting the rich at the expense of the majority.

“The Republican Party has been taken over by people who just don’t believe in government,” he told donors gathered at the Los Angeles mansion of screenwriter Shonda Rhimes.

Republicans blame Mr Obama for the stalemate on taxes, saying he hasn’t done enough to negotiate with them.

About 41 US companies have switched their addresses to low-tax nations such as Ireland since 1982, often through a takeover of a smaller company, reducing their tax bills while typically keeping their executives and listings in the US.

Eight more are pending, including Minneapolis-based Medtronic and Pennsylvania-based Mylan. Pfizer, based in New York, attempted to move its tax address to the UK by purchasing AstraZeneca.

The quickening pace of inversions prompted the White House to intensify its calls for action. Last week, US treasury secretary Jacob Lew called for a “new sense of economic patriotism,” asking Congress to pass tax changes.

The Treasury has said that blocking inversions would prevent $17bn from escaping the US tax system over the next decade.

The administration’s plan, which was included in its budget, would effectively prevent US companies from taking advantage of inversions through buying smaller foreign firms.

According to a Gallup poll 66% of Americans say corporations are paying too little in taxes.

Republicans control the House, giving them the power to stop Congress from acting. They’d prefer a broader reworking of the tax code.

— Bloomberg


More in this Section

‘Radical culture change’ needed in Irish banks

‘Earn the public’s trust’, says developer of Limerick's King’s Cross

IT@Cork awards laud tech talents

M20 motorway can bring thousands of new jobs


Breaking Stories

Donohoe: Banks must do more on tracker scandal; up to gardaí whether to get involved

Lifestyle

Live music review: The Horrors - Icy genius in a thrillingly intimate setting

Why a good breakfast is a must for your kids

Facing fears while terrifying punters at Cork's Nightmare Realm

Weathering the storm of 1961: We watched 30 large trees uprooted

More From The Irish Examiner