Tags: Barack Obama | obama | cnbc | tax | inversions | economy

Obama Tells CNBC Companies Cheating America With Inversions

By    |   Thursday, 24 July 2014 04:08 PM

President Barack Obama focused on "fairness" in an interview on economics Thursday on CNBC and declined to give a specific number for upper tax rate limits.

Obama spent most of the interview talking about tax inversions, the practice of U.S. companies merging with smaller overseas corporations to avoid paying taxes in the United States.

With nine inversions pending this year, the administration and Democrats in Congress have been pushing for a law to make the rules more strict.

Story continues below video.

In at interview recorded in California, where the president is spending the day making speeches and fundraising, Obama told CNBC Senior Economics Reporter Steve Liesman that American companies thrive because they benefit from the best university system in the world and the best infrastructure, "although I'd like to see it do a little better on infrastructure."

"There are a whole range of benefits that have helped to build companies, create value, create profits," Obama said. "For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes is neither fair nor is it something that's going to be good for the country over the long term."

Companies are taking advantage of tax provisions that are "technically legal," Obama said, but he added that most people would say the corporations are "really not doing right by the country and by American people."

Liesman pointed out that both Republicans and Democrats support corporate tax reform, but that many of Obama critics say he has not put his presidential muscle behind this issue like he did with healthcare and the economic stimulus.

Obama blamed the lack of movement because Congress right now "is just not real productive."

Democrats have introduced bills in Congress to change the rules of foreign-owned corporations. Currently, only 20 percent of a company's stock must be foreign-owned for it to be considered a foreign company for U.S. tax purposes. The proposed law would raise that to 50 percent, among other changes.

Obama said the White House is behind reform as long as it is about making system fairer rather than "slashing corporate rates while maintaining a bunch of loopholes that aren't productive and aren't creating jobs and value here in America."

Despite the opinion of Obama's former economic adviser Lawrence Summers that America may be in for a protracted period of slower growth, Obama said he is "bullish about America over the long term."

He pointed to a rising stock market, corporate profits and housing market and lower unemployment as well as a rising auto industry, lower deficits slowing healthcare inflation.

The economy is "poised to take off," Obama said, but congressional "inaction" on infrastructure and raising minimum are wage holding the country back.

Liesman noted that Obama has raised the top tax rate to 39 percent and asked whether he plans to raise it higher or if he has a specific figure in mind for the top rate.

"I don't have a particular number in mind," Obama admitted, "but if you look at our history we are still well below what the marginal tax rates were under Dwight Eisenhower, all the way up to Ronald Reagan."

He said he was more interested in closing tax loopholes than raising marginal rates.

"If you are making a billion dollars a year and you are paying 15 percent on that billion dollars when your secretary is paying 20 percent, 23 percent, that's not fair," Obama said.

Obama also talked about the situation in Ukraine, where Malaysia Airlines Flight 17 was shot down last week, killing 298 people.

The fact that the plane, filled with people of various nationalities, was shot down apparently by Russian-back separatists "may stiffen the spine of our European partners moving forward" with sanctions of Russia, Obama said.

The president also focused on tax inversions in a community college speech Thursday afternoon.

Democrats are hoping to make tax inversions a major issue in the midterms as Obama's popularity has waned. His signature healthcare law also isn't as popular as Democrats had hoped, sending members of that party running for re-election in red states to distance themselves from both Obamacare and the president.

A recent Washington Post-ABC News poll showed that 58 percent of Americans, including 54 percent of Latinos, are disappointed with Obama's handling of the border crisis, as tens of thousands of unaccompanied children have flooded the border from Central America in recent months.

A Pew Research Center poll found that 30 percent of voters said they will cast their midterm ballots in "against" Obama in November. Only 19 percent said their vote would be a show of support for him.

And The Wall Street Journal slammed Obama as "most provincial U.S. president in at least a century" for what columnist Daniel Henninger called weak leadership in multiple crises, including the downing of Malaysia Airlines Flight 17 last week over eastern Ukraine. As that crises and the Israeli-Hamas conflict escalated, Obama focused on fundraising, Henniger noted.

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President Barack Obama focused on fairness in an interview on economics Thursday on CNBC and declined to give a specific number for upper tax rate limits...
obama, cnbc, tax, inversions, economy
Thursday, 24 July 2014 04:08 PM
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