Several American companies are moving their headquarters overseas and essentially renouncing their U.S. citizenship through a practice called tax inversion to survive and remain competitive, says Chris Chocola, president of the conservative anti-tax group Club for Growth.
"These companies are trying to compete in a global marketplace and they're trying to compete against companies that have a much lower tax burden and therefore their overall costs are lower so they're more competitive," Chocola told John Bachman on "America's Forum" on Newsmax TV.
Story continues below video.
Watch Newsmax TV now on DIRECTV Ch. 349
and DISH Ch. 223
Get Newsmax TV on your cable system – Click Here Now
"So it's just math," he explained. "It's just trying to compete and the reality of today's market place which is global and so they're trying to find a way to be able to lower their tax burden."
According to the Club for Growth president, Congress needs "to engage in meaningful tax reform, which would be one of the most pro-growth things we could do for our country."
The way companies are able to engage in tax inversion is by purchasing or merging with a company overseas and then claiming the new company as their headquarters.
Salix Pharmaceuticals Ltd.
recently announced that it would be merging with an Irish company for the purpose of lowering its taxes. Other companies that have made similar moves includes the pharmaceutical company AbbVie Inc. and the medical device maker Medtronic Inc., both of which purchased companies in Ireland.
The drugstore company Walgreen Co. recently acquired the European drugstore chain Alliance Boots and is also in the process of considering changing its tax domicile to Switzerland, where that company is based.
American companies are trying to escape the 35 percent corporate tax rate, which is the highest corporate tax rate in the industrialized world.
By establishing a new tax domicile, companies are able to avoid having the United States impose taxes on overseas earnings.
Economist Stephen Moore
told Newsmax that the U.S. corporate tax rate is pushing these companies out of the country.
Treasury Secretary Jack Lew is asking Congress to enact legislation to penalize companies
that try to move overseas to lower their tax burden.
Lew said at a business conference hosted by CNBC in New York that U.S. companies "should have some economic patriotism here."
"Secretary Lew accused these CEO's of these companies of being unpatriotic," Chocola said.
"The only unpatriotic thing is running these people out of the country and running the jobs out of the country," he added.
"Joe Manchin's West Virginia Senator, Democrat, his own daughter runs a pharmaceutical company and she just did this and her point was, 'you can't maintain an uncompetitive situation, you just can't do it, the odds are just not in your favor,' she says, 'to be able to stay in business,'" the Club for Growth president explained.
"It's just a practical thing these companies have to do to survive," Chocola added. "And they can't get the attention of the United States Congress or this president to engage in meaningful tax reform that would help keep them here, grow the jobs and grow economy."
© 2014 Newsmax. All rights reserved.