U.S. corporations considering a move out of the United States for tax purposes should be wary of President Barack Obama's strong criticism of the practice, says Douglas Holtz-Eakin, president of the American Action Forum.
"Corporations should be genuinely alarmed,'' Holtz-Eakin said Monday on "The Steve Malzberg Show" on Newsmax TV.
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Last week, Obama blasted as unpatriotic those companies that avoid federal taxes by moving their tax domiciles overseas. Several Democrats have offered bills to reduce the practice.
"If the Senate were to somehow pass something, then there's a good chance it would get slammed through the House in the lame-duck sessions. So, all that's bad policy-making,'' Holtz-Eakin said.
"The president's proposal, in fact, is to say, look, you can't call yourself a foreign-owned corporation unless you actually put the management in the foreign country.
"I'd be afraid that the Congress gets weak-kneed . . . the president picks up his pen, uses some executive authority, and does it himself.''
Holtz-Eakin, whose Washington, D.C.-group is a center-right policy institute "providing actionable research and analysis to solve America's most pressing policy challenges,'' said corporations considering moving are just being practical.
"Let's remember what these deals are. First and foremost, these are good business deals with intrinsic benefits to the shareholders,'' he said.
"Our tax code is so antiquated and out of step that they're forced to put the headquarters abroad. It is in their financial interest, no question.
"It's 100 percent legal, 100 percent driven by the desire to get their hands on trillions of dollars that are parked offshore and grow their businesses.''
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