Obama Wants Limits on US Company Mergers Abroad

Thursday, 24 Jul 2014 06:32 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

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.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Peter King: We Need Better Surveillance of Terror Suspects

Wednesday, 22 Oct 2014 22:07 PM

The United States and its allies need to place greater surveillance on people suspected of terrorism, Rep. Peter King to . . .

Ottawa Attacks in Quiet Heart of Canada Bring End to Innocence

Wednesday, 22 Oct 2014 21:25 PM

The shooting spree that paralyzed Canada's capital may change the self-image of a country that's long prided itself on a . . .

Senator Blasts CIA for Censoring 'Torture' Report

Wednesday, 22 Oct 2014 20:54 PM

Sen. Ron Wyden says the CIA is trying to blunt the impact of an upcoming Senate report examining the harsh treatment of  . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved