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

    Other than tax avoidance, there is no other compelling reason that these companies do this. Of course the GOP will speak of any such legislation as class warfare now that corporations are people. Mitt was right!

    July 24, 2014 08:57 am at 8:57 am |
  2. RES

    I completely agree. They use U.S. resources and then don't pay their fair share. It hurts all us tax paying citizens.

    July 24, 2014 08:58 am at 8:58 am |
  3. Lizzie

    His buddy Jeff Immelt (GE-CEO) won't like that.

    July 24, 2014 08:58 am at 8:58 am |
  4. Thom

    I totally agree.....and any of them that do that should NOT be able to sell their products in the USA. There should be a Gov't ban on those companies products. They take their jobs over seas, hide their money overseas and avoid taxes, thus putting more burdens on the middle class. But they want all the benefits of being an American owned company. So the President is current, they are being un-American. Those products made outside of the USA and shipped back in should be taxed as imports then.

    July 24, 2014 08:58 am at 8:58 am |
  5. pchelp, Juneau, AK

    When I took a class in tax preparation, taught by a former IRS agent, I was told that tax avoidance was fine-tax evasion wasn't. Apparently Obama disagrees with the IRS over this-or maybe it's just that the philosophy has changed in the last 20 years. Either way, I disagree with him. If you don't like people taking advantage of loopholes in the law then change the law. It's not the people's fault if you've passed a poorly written law.

    July 24, 2014 09:00 am at 9:00 am |
  6. jasmine

    Walgreens is the newest one.

    July 24, 2014 09:00 am at 9:00 am |
  7. Tom

    Allowing the country to be invaded by those from central America, includi g known gang members is unAmerican

    July 24, 2014 09:00 am at 9:00 am |
  8. Lagos

    The government really can do no wrong, can it? It crafts the laws, it doesn't fix the loopholes, and anybody and any company that decides to work within the existing laws to do what's best for them financially is called little better than a traitor.

    July 24, 2014 09:01 am at 9:01 am |
  9. George

    I get that this makes people upset – but how does this make them "un american"? Ikea doesnt pay taxes like the US companies do because it is foreign – and somehow we think (under the presidents logic) that foreign firms should get treatment under the tax laws that our own companies dont get? How does this make sense? If we want America to be a prosperous place where companies CHOOSE to locate then we need to make the tax situation a level playing field with other countries.

    I want everyone to know that I take a mortgage interest deduction. That is an allowed deduction under the code and the only reason these companies pursue these inversions is to allow for better treatment of their foreign earned incomes – legally, under the existing code. If we want to make this illegal – we can – but it wont do anything other than make our country less attractive. This is populism.

    I get that for whatever reason we love to demonize big business in this country. I work for a big business and while it isnt all peaches and cream – they do give me a job, for which I am grateful. I dont see why big business should always be the enemy, it is not productive.

    July 24, 2014 09:01 am at 9:01 am |
  10. gm

    If a corporation paid legally required taxes, what 's wrong with that? we are all trying not to pay one penny more than we should. Also, they are not avoiding any taxes for the money made in US. They try to avoid paying taxes they made oversea and paid oversea taxes. US is the only country which will tax any after tax income from a foreign country.

    July 24, 2014 09:01 am at 9:01 am |
  11. di

    'hello...kettle'

    July 24, 2014 09:03 am at 9:03 am |
  12. Steve

    President Obama, I agree! Now a few questions. How much did Medtronic donate to your campaigns? Time for new law. Any US company doing this should lose all patents immediately, the top 100 executives should have to move to that other country and no deduction for any headquarter costs at all in US on US tax return. In fact why not expel them from NYSE and NASDAQ?

    July 24, 2014 09:05 am at 9:05 am |
  13. O'drama ya Mama

    Its becoming more and more clear that those on the right respect the rights of corporations more than they do actual people. Corporations using tax loopholes is just as bad as gaming the system to get welfare. If you are against one you should also be against the other.

    July 24, 2014 09:06 am at 9:06 am |
  14. jj

    No one is less pro America than our dictator in chief!!!!

    July 24, 2014 09:06 am at 9:06 am |
  15. Common Sense and the Reality

    C'mon People! Wake Up! Corporations NEVER PAY their actual TAX RATE. They may be taxed at a 35% rate however AFTER LOOPHOLES and DEDUCTIONS they pay very little or nothing at all.... and yet, those who pay little in taxes continue to ship jobs and money overseas. It is all about Wall Street GREED. The Corporations use tax payer roads to transport their goods. Hire people who have attended Public Schools. Take full advantage of clean water, clean air, and a safe domestic envinronment. However they feel WE should pay for this - not Them.

    July 24, 2014 09:09 am at 9:09 am |
  16. katie

    ..and then all these companies move businesses else where...that will great for america.......ignorant

    July 24, 2014 09:09 am at 9:09 am |
  17. g

    What is un-American is the tax burden our government places upon its citizens and business entities. Our country is collapsing under the weight of special interest and entitlement programs.

    July 24, 2014 09:10 am at 9:10 am |
  18. fernando lozano

    companies are have a fudiciary responsibility to pay the minimum amount of tax required by law. if you don't like the "legal loopholes" change the law.

    you cannot recklessly criticize a company for following the law to minimize their tax obligations.

    July 24, 2014 09:11 am at 9:11 am |
  19. aCriticalEye

    I abhor big business !

    July 24, 2014 09:12 am at 9:12 am |
  20. Hypocrites-R-Us

    "Of course, it's perfectly okay for my rich self to take every loop-hole available when filing my personal taxes to avoid paying my fair share."

    – Barrack Insane Oblunder

    July 24, 2014 09:12 am at 9:12 am |
  21. Howard Kahn

    Taxing corporations as much as we do and using that money to pay people who don't want to work is un- American. If I ran a corporation I would do what I could to minimize this, including moving my headquarters over seas.

    July 24, 2014 09:12 am at 9:12 am |
  22. I AM

    Isn't Halliburton in Dubai...right after Cheney left office he moved his headquarters there. He loves the USA.

    July 24, 2014 09:13 am at 9:13 am |
  23. mbutler91c

    I wonder if he is including the 1%'er's house that he just had a fundraiser in...you know, the one where the guy place some solar panels on his home to get federal tax subsidies. Or does he just mean the Right Wing companies that take advantage of the same exact laws the Left Wing does that are written in by politicians just like him?

    July 24, 2014 09:13 am at 9:13 am |
  24. blakenaustin

    Wrong again Mr. Obama. You are unAmerican. When are you going to resign in disgrace?

    July 24, 2014 09:13 am at 9:13 am |
  25. AustinRoth

    So, let me get this straight. Following the laws as written, taking advantage of what is and is not allowed under those laws, is now "un-American".

    What's next? Will they will label them "organizations engaged in economic terrorist activities against America", and seize and nationalize them?

    July 24, 2014 09:13 am at 9:13 am |
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