Obama offers populist message on corporate taxes at end of fundraising trip
July 24th, 2014
06:25 PM ET
5 months ago

Obama offers populist message on corporate taxes at end of fundraising trip

Los Angeles (CNN) - Ramping up his populist economic message as midterm elections near, President Barack Obama on Thursday singled out large companies that maneuver through legal loopholes to avoid paying U.S. taxes as “corporate deserters.”

Those firms have effectively renounced any allegiance to their home country, Obama claimed during remarks at a community college here.

“You shouldn't get to call yourself an American company only when you want a handout from American taxpayers,” he said later, calling the practice, known as “inversion,” unpatriotic.

“I don’t care if it’s legal,” he said. “It’s wrong.”

Obama was touching on an issue Thursday that Democrats believe could help them win over voters in this year's midterm contests. The President has long decried the inherent unfairness in large, multimillion dollar corporations that operate chiefly in the United States but pay little in U.S. taxes. He used the issue to attack Republican Mitt Romney during the 2012 presidential campaign.

On Thursday he heightened his anger at the firms who take advantage of the legal practice, which officials say has led to $17 billion in revenue slip through the government’s fingers.

“You are just gaming the system,” he said of inverted companies during an interview with CNBC. “You are an American company, you continue to benefit in all kinds of ways from being an American company. It is true that there may be a lot of things that may be legal that probably aren't the right thing to do by the country.”

In the past decade, at least 47 U.S. companies have made the move to incorporate in nations with low corporate tax rates. Several inversions have been proposed this year and more are in the works.

Both Republicans and Democrats say the entire tax code needs an overhaul, but Obama is pressing lawmakers to take action now to prevent inversions. Administration officials say such a measure must retroactively bar any firm that moved abroad after May 2014 from enjoying lower tax liabilities.

They say such an inclusion would prevent a rush on inversions as a new law makes its way through Congress.

The White House has aimed this week to advance the President's economic agenda, focusing on jobs programs and the economy. Bolstering the middle class has formed much of Obama's midterm election year pitch, and Thursday’s event took on the air of a campaign rally, complete with an angry protester calling Obama the Antichrist.

But world events – including Israel's ground invasion of Gaza and furor over the downed airliner in Ukraine – have largely overshadowed the intended topics this week, despite the White House's attempts to highlight new job training measures.

Obama's remarks Thursday, which were delivered at a technical college in downtown Los Angeles, came at the end of a three-day fundraising swing that also brought him to Seattle and the Silicon Valley. The event was the only public showing for Obama during his stay on the West Coast.

He withstood some criticism for not canceling the trip, which aides countered by saying the President could conduct his job from anywhere. The White House did, however, nix an appearance on "Jimmy Kimmel Live," replacing the late night show with the more sober CNBC interview.

CNN Money's Jeanne Sahadi contributed to this report.


Filed under: Democrats • Economy • Jack Lew • President Obama • Republicans • Taxes • Treasury • Treasury Department • White House
soundoff (323 Responses)
  1. Rogue351

    Companies and people who take all of the profits and pay only a select few are un-American. More and more wealthy people, large and small companies are hording wealth they did not earn on their own. The middle class of American cannot exist in this type of environment with only a select few taking 90% of all profits. People want to work, buy a home and start a family. People do not want to work only to see a select few with 3, 4, or 5 homes and a new exotic sports car every few months. Not everyone can start their own business. With that said those that do are entitled to more of the profits. However, in most cases they are taking all of the profits and paying employees hardly anything. This goes far beyond business. This is greed and a lack of morals. Big companies as well as the rich use things like Obama care against their employee when the moral solution is instead of the owners taking home 90% of the profits they only take home 50% of the profits. This is where greed comes into play. Do they really need that 3rd or 4th home ? Or would it be better giving the employee a bit more so they can have a home. Greed and wide spread narcissism among the rich is the problem. Not the economy or the president.

    July 24, 2014 11:21 am at 11:21 am |
  2. Sniffit

    "OR....just a thought here, maybe before admonishing business owners who use the law to legally protect their companies from over regulation/taxation by the U.S. government"

    It ahs nothing to do with overregulation. It has EVERYTHIGN to do with them wanting NO regulation...which is why they go to countries that provide, for all practical purposes, precisely that.

    "Obama et al should make the U.S. more business friendly"

    Translation: Obama et al should turn the American labor force into Chinese labor.

    That's the argument in a nutshell. From any reasonable, rational understanding of human and business behavior...from an economics standpoint and a psychological standpoint...they will go to these countries and expatriate the wealth and jobs as long as they are able to reduce costs by doing so. There is absolutely no way under God's blue sky for the U.S. government and America's economy to reduce their costs of doing business here to the extent that it is equal or even cheaper to do business here OTHER THAN by reducing the American labor force to the same kinds of wages, rights and treatment. The ONLY other option is to make it more expensive for them to leave and THAT is what we should be considering.

    "you see that is where JOBS and TAXES come from, the government doesn't 'create' anything, aside from rather warm drafts from time to time."

    The government created everything that makes these businesses possible in the first place....all of America's infrastructure, the funding for all the research and innovation that takes place (e.g., you think the internet dropped off a tree?), etc. Until you can admit that, you're not making a serious contribution to the discussion.

    July 24, 2014 11:22 am at 11:22 am |
  3. Tax Evading Americans (Tea Party)

    The tax code needs to be amended and simplified, however, that is no excuse for just avoiding taxes because you want to. Take Kansas for example. They had the biggest state tax cut in history and now are facing a budget short fall.
    Even the GOP legislators are now backing the Democratic candiate for Governor.

    July 24, 2014 11:23 am at 11:23 am |
  4. OBAMA - THE OPEN BORDERS PRESIDENT

    The question should be is it legal. Yes it is legal. If our corporate tax rate wasn't one of the highest in the world companies would not be doing it. I do not like it but that is the law. If you are corporation there is no way you would bring that money back unless there were no penalties and tax rates were competitive. The IRS already has already taken huge hits with the targeting scandal and the house has proposed slashing their budget so good luck getting money for enforcement of whatever they got lucky enough to pass.

    July 24, 2014 11:23 am at 11:23 am |
  5. Tony

    Avoiding taxes legally is not wrong. The government giving tax breaks to corporations without offsets in government spending is wrong. A flat tax that shifts tax burden to the poor is also wrong.

    July 24, 2014 11:23 am at 11:23 am |
  6. Rudy NYC

    Fair is Fair protested:

    What on God's Earth are you rambling about?

    Progressive tax rates have been in effect since the income tax was put in place in 1913.

    And who said anything about paying taxes on past profits? I used GE as an example of a corporation who paid zilch on $14 Billion in profits and that a flat tax would prevent from happening.
    ------------------------------------
    Who said anything about paying taxes on past profits? Put down the tea. Aren't we supposed to be talking about money [profits from years gone past] being held in off-shore accounts? Don't we want to repatriate that money? Have you completely forgotten that people/companies should have to pay taxes on that income? Or do they just get to keep that money tax-free? I'm just asking.

    July 24, 2014 11:23 am at 11:23 am |
  7. JBP

    I may be wrong but American citizenship benefits are quite a bit higher than many other countries. . Some want all the benefits of a trillion doallar war machine for example but pay taxes like they live in Scotland.

    July 24, 2014 11:24 am at 11:24 am |
  8. Obama & Democrats - Anti-business class warfare, Destroying the economy, Destroying the country

    Isn't patriotism an emotion? Don't people have emotions? Hasn't Obama and the lefties been ranting non-stop since the Citizens United decision that corporations aren't people? For God's sake, make up your mind and settle on your train of lies please!!!

    July 24, 2014 11:26 am at 11:26 am |
  9. I AM

    So these US companies would rather support a foreign country with their taxes than the USA. They want to sell their products to US customers and enjoy protection of US commerce laws. If you think these companies are doing this in order to protect revenue to increase the work force in the USA, then you're wrong.....it's always been about profit and satisfying their investors.

    July 24, 2014 11:29 am at 11:29 am |
  10. Roe

    @ George

    Typical sell out.........................

    July 24, 2014 11:35 am at 11:35 am |
  11. rs

    Fair is Fair

    A flat tax that removes all loopholes would work...
    _______________________
    As it is already well known that the so-called flat tax benefits the rich and punishes the poor, I am not surprised you proposed that. Why not lavish the rich with an even more egregious tax cut? I haven't ever heard such a proposal for business, transactional or corporatize taxes however.

    A straight 10 or 15% no loophole tax rate for corporations might generate money for awhile, but given that, what, only maybe 40% of corporations actually pay taxes now (and at as little as a 4% rate) would probably trigger a corporate exodus of a fair magnitude. Remember their total tax rate payout share of the GDP is now well under 2%.

    Great- impoverish lower-income Americans and drive away the jobs- THAT'S a plan!

    July 24, 2014 11:35 am at 11:35 am |
  12. FLIndy

    It is truly amazing how some on here act as though corporations have just started leaving the U.S. during Obama's presidency. I swear all of you are either only 5 years old or are senile and can't remember anything before the Obama years. Companies have been jumping ship for decades and this president has been trying to close loopholes and lower the corporate tax rate since Year 1 but you probably didn't hear about that on your "Faux" news. Face it, as long as he has a Repub controlled House they aren't going to budge to help the country because that would be giving this president success and they can't have that as they are soooooooo patriotic!!

    July 24, 2014 11:38 am at 11:38 am |
  13. Mark

    So how does an American company renounce citizenship? There's no such thing but if there was they would all leave to escape this hard lined anti-business administration. The president feels American companies and successful people are evil and need to be stopped – fine they'll leave. Except for the ones who give huge donations to the Democrat Party – he'll bail them out with tax payer money. Maybe he can get the IRS to discriminate against these firms – it worked against the tea party.

    July 24, 2014 11:39 am at 11:39 am |
  14. Fair is Fair

    Rudy NYC

    Fair is Fair protested:

    What on God's Earth are you rambling about?

    Progressive tax rates have been in effect since the income tax was put in place in 1913.

    And who said anything about paying taxes on past profits? I used GE as an example of a corporation who paid zilch on $14 Billion in profits and that a flat tax would prevent from happening.
    ------------
    Who said anything about paying taxes on past profits? Put down the tea. Aren't we supposed to be talking about money [profits from years gone past] being held in off-shore accounts? Don't we want to repatriate that money? Have you completely forgotten that people/companies should have to pay taxes on that income? Or do they just get to keep that money tax-free? I'm just asking.
    ----------–
    No... you commented on my remark about a flat tax. Anything about repatriated money arose from the deep dark abyss of Rudyville. Stay on topic if you're going to remark on someone's comments.

    July 24, 2014 11:39 am at 11:39 am |
  15. Sniffit

    "Avoiding taxes legally is not wrong. "

    1. Sure it is. We're not talking about it as if it's illegal or accusing anyone of violating the law. Obama's comment was primarily a statement about the fact that such behavior evidences a serious moral and ethical problem, i.e., that people who want all the benefits of being American citizens are doing everything they can to avoid making any contribution to the America that provides those benefits. They want it for free while they use it to get insanely rich. Whether it is legal or not is really irrelevant to that calculus.

    2. To the extent we ARE talking about whether it's legal, we're talking about why it shouldn't be and why our laws that encourage it by allowing it are bad laws and why it should be changed. Just because things are legal doesn't mean they are right or ok.

    July 24, 2014 11:41 am at 11:41 am |
  16. rs

    Put America First

    Does that mean that Obama is unAmerican for using loopholes to avoid paying taxes? Obama has it wrong. Competition is American and other countries are making better choices than we are when it comes to attracting businesses.
    ____________________________
    Yes, other nations that can actually afford government health care for their citizens, lower corporate taxes and much more because they don't have a $trillion military machine to feed. You're right it is about trade-offs.

    July 24, 2014 11:41 am at 11:41 am |
  17. Rudy NYC

    Tom l

    Rudy has officially jumped the shark. He offers no relevant information and has no desire for conversation. He just wants to talk about the liberal agenda and what is best for it. He has no desire to seek common ground and is only interested in spewing his talking points day in and day out.

    On the other hand, I have noticed a change in tone and content with the Real TP over recent days and I think it's awesome.
    ------------–
    Jerk Alert! Jerk Alert! Jerk Alert!

    Tom's just made because he has no facts to support his assertions that tax cuts and deregulation can solve any and every thing. It just ain't so. Because if giving some company a tax cut would help them build a light speed hyper-drive, then I would be a true believer. If a tax cut could cure cancer, then I would be a true believer. If deregulating the oil industry could cure poverty, then I would be a true believer.

    But, since I realize that "Atlas Shrugged" is a work of fiction, and was written by an avid admirer of Karl Marx. Her fans do not seem to realize what inspired the book, nor do they realize that the fantasy world described in the book was the ultimate vision of imperial capitalism, to which Marx so envied in the West. You see, Marx was a big fan of the British Empire, and the globe spanning empire that they had created. He wanted his own.

    July 24, 2014 11:41 am at 11:41 am |
  18. Sniffit

    "If our corporate tax rate wasn't one of the highest in the world companies would not be doing it.

    Smokescreen. Nominal rate means nothing. Effective rate means everything. Thanks for playing.

    July 24, 2014 11:43 am at 11:43 am |
  19. Pete

    Those companies are not breaking the law, nor are they un-American. They are using loopholes in the tax code that were put there by ELECTED OFFICIALS

    July 24, 2014 11:56 am at 11:56 am |
  20. Pete

    Those companies are not breaking the law, nor are they un-American. They are using loopholes in the tax code that were put there by ELECTED OFFICIALS in order to gain financial support from some company. You want to place the blame? Put it on your elected official that voted for it. You want to make it harder to do this? CHANGE THE LAW. I suggest that the tax code be changed this way: Take the section that defines income and throw away the rest. Put in place a flat 10% or 15% tax on income. No deductions, no special loopholes. Do have 10 kids? Great. But there are no deductions for kids or homes or interest or anything else. Of course, this will never happen because politicians couldn't buy votes or do social engineering if it was in place.

    July 24, 2014 11:59 am at 11:59 am |
  21. ???

    It must be election time... time to ramp up the usual left wing agenda. Attack the rich, attack business, attack corporations, claim victimhood, demand social justice, say the system is rigged, blah, blah, blah.

    And then wonder why we still have massive unemployment. Wake up America.

    July 24, 2014 12:05 pm at 12:05 pm |
  22. barryinlasvegas

    What is really un American is how this administration sits and watches report after report come out about various government agencies paying out billions of dollars in fraudulent bills, tax returns, Medicare and Medicaid over payments and does nothing about it.

    Obama's thinks the companies who are moving their business overseas to escape paying the highest taxes of any country should instead pay the higher tax so he can continue to piss it away.

    How about lowering the tax rate so they keep their money here and start hiring more people?

    July 24, 2014 12:20 pm at 12:20 pm |
  23. Tom l

    Smokescreen. Nominal rate means nothing. Effective rate means everything. Thanks for playing.
    ----

    And a flat tax with little to no loopholes would support your statement. Some "loopholes" make sense like the mortgage deduction. But almost everything else has come about due to lobbyists. A flat tax dramatically reduces the opportunity for our politicians to be bought off.

    July 24, 2014 12:41 pm at 12:41 pm |
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