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. Dixon

    It's not illegal, un-American or akin to renouncing citizenship to comply with any U.S. law. The tax laws that corporations use to accomplish this tax "avoidance" were all passed by both houses of Congress and signed into law by the then sitting U.S. President. If President Obama wants to complain he needs to address his complaints to the Members of Congress who enacted these laws, not to the corporations who follow the law. If President Obama does not like the way those tax laws were enacted he needs to address his concerns to the Members of Congress who voted in favor of those laws. Not liking a law gives a person, any person, the right to complain about the law. Not liking a law is not a valid reason to complain about corporations or individuals who comply with that law. If he does not like the law then he should ask Congress to change it.

    July 24, 2014 09:47 am at 9:47 am |
  2. Rosslaw

    Not paying taxes is the sincerely held religious belief of these corporations. End of discussion.

    July 24, 2014 09:48 am at 9:48 am |
  3. Johnson

    Corporate taxes in the US are amongst the world's highest. Little wonder that companies think about moving since taxes are folded into the cost of products making it difficult to compete with companies from other nations. It is hard to understand how democrats can be so clueless about business and economics.

    They trashed our economy from 2007-2011 and will do it again given a chance.

    July 24, 2014 09:48 am at 9:48 am |
  4. MVBrandt

    I mean, I agree with doing what we can to stop tax loopholes, just frustrated yet again by the rationale. "Obama will touch on an issue Democrats believe could help them win over voters in this year's midterm contests."

    When did it become completely acceptable that the primary motivator behind presidential or congressional decision-making is how to win over mid-term voters? It's been going on for an incredibly long (decades/centuries) time to some degree, of course, but we aren't even shy about it now – "We're going to talk about what we think will get you to vote for us ... that's basically our only motivation."

    July 24, 2014 09:49 am at 9:49 am |
  5. Don

    Sigh ... A corporation is nothing more than a legal and organizational structure designed to obtain wealth and distribute that wealth to it's stock holders. Its not a person ... it doesn't have a soul ... it doesn't have a conscience ... it doesn't have morals ... it most CERTAINLY doesn't have religious beliefs (I'm looking at you Hobby Lobby!) What exactly does Obama think this "shaming" is going to do? Corporations don't care if they're "American" or not ... all they care about is profits. Obama can say corporations fertilize their gardens with the hearts of aborted fetuses for all they care so long as it doesn't hurt their bottom line.

    July 24, 2014 09:49 am at 9:49 am |
  6. Chris

    Not sure about that statement, The problem is many companies offshore their cash and won't keep it here due to being stomped with high rates. The company I work for which is VERY large has the bulk of its assets over seas for this very reason. They want to avoid loosing it. It would devalue the company and cause massive layoffs. There is more than one side to this.

    July 24, 2014 09:49 am at 9:49 am |
  7. frank

    That is a stretch BO. Renoucning Citizenship? Really? Many of us on both sides of the isle strongly disagree. How about you put a cork on the inbound Illegals crossing the border everyday. How many terrorists are in that influx and you will not even visit the border to size up the problem?

    July 24, 2014 09:50 am at 9:50 am |
  8. Danny Boy

    I disagree Mr. President. America is about freedom. Freedom to disagree, freedom to act, react, freedom to stand out from the common drone. I don't have to support the laws passed by Congress just like I don't have to support the troops fighting in a war I don't agree with. I am not suggesting do anything illegal, but if the law allows Companies to continue to operate without paying taxes, then what do you expect? Congress needs to re-evaluate the laws put in place. Do not say someone is 'Un-American' for working towards to their own personal/corporate benefit. I am 100% confident this is what America has always been about. Americans mostly are opportunists, capitalists, and entrepreneurs at heart. I think just because Capital Hill decides 'we' need to go to war, they expect everyone to agree. Just because Capital Hill says the corporate tax rate will be 'X' we all get out our check book. Don't be so naive. This is a country of 300 million + human beings. We are going to do what is best for us individually and locally not simply because you think it is 'American.'

    July 24, 2014 09:51 am at 9:51 am |
  9. Lynda/Minnesota

    Oh, hey. A whole lot of folks seem to be protecting the corporations are people too financial ability to avoid paying taxes. Totally not surprised these days over anything that comes from right wing America talking points.

    July 24, 2014 09:52 am at 9:52 am |
  10. timothy

    Since when does following the law amount to giving up citizenship and disloyalty to ones country? Oh yeah, I guess I should have known based on how unlawful peple coming here and abusing our laws are welcomed. I guess that was my first clue. If laws are not good, fix them. Of all presidents to make this claim, this one is without legs based on his abuse of our system of law in his behavior to decide whih to follow, when and who should follow. LOL

    July 24, 2014 09:52 am at 9:52 am |
  11. Bill Davis

    Man must be talking about his old bud, Jeff head of GE.

    July 24, 2014 09:53 am at 9:53 am |
  12. Nick Bibassis

    Ken wrote "How about some examples of the worst offenders? Apple, America's darling for starters. These tax evading corporations need to be exposed, and Americans need to boycott their products until they pay their fair share in taxes."
    Ken take a minute to research what Apple's US tax rate is 26.1 percent. In 2012, 1 out of every 40 dollars of corporate income tax paid to the US treasury came from Apple.
    Two-thirds of Apple's business operates overseas, meaning they manufacture, sell and support 66% of their products to clients that don't live in US.
    It's completely legal and justified for Apple to not repatriate after-tax profits from overseas operations. Who wants to be double-taxed? A lower tax rate for repatriating funds that have already been taxed once before makes sense.

    Requiring other US companies to pay Apple's equivalent tax rate for US operations would eliminate most of the budgetary issues and let's get rid of subsidies for Exxon which to me is pure corporate welfare.

    July 24, 2014 09:54 am at 9:54 am |
  13. buckeyechucke

    Mr. Obama is right, this country is a great country because of high taxes on the wealthy and corporations. The republican party of today is based on wealth distribution to the top not spread across America.

    Another thing that truly upsets me is the way the republicans trash American's in government, they talk as thought they are a foreign power, ever time they belittle them they are making America weaker, good government helped make America great republican's are against god government.
    VOTE ALL REPUBLICAN'S OUT IN 2014!!!!!

    July 24, 2014 09:55 am at 9:55 am |
  14. CSM

    I thought Obama felt that corporations did not have feelings, rights or opinions. But now they should be shamed because they are un-American? If he feels that a corporation does not have personhood, how can a corporation have any allegiance to a country?

    On one side he thinks corporations should “care” about employees, “provide” a better standard of living, and be “patriotic” but then he claims that a corporation should not have any “beliefs” or any “moral” positions.

    July 24, 2014 09:56 am at 9:56 am |
  15. JustTheFacts

    People trying to pivot the issue to illegals are barking up the wrong tree. The fact is a large portion of illegals in this country work jobs where they have the same decutions from their checks for taxes and benefits as US citizens, but because they're illegals, they will never collect those benefits. So, basically, those illegals are subsidizing your social security and unemployment benefits!

    Think about that for a minute.

    July 24, 2014 09:56 am at 9:56 am |
  16. Susan

    Did you know that the US is the only country that taxes US citizens living in another country and paying taxes there as well? Worse yet, many states lay a claim as well until that person renounces citizenship. So if you decide to retire in Italy and move there plus bank there, you still must pay taxes for that same income in both countries as well as some states.

    Obama never understands what he is talking about. He can only read the prompter.

    July 24, 2014 09:57 am at 9:57 am |
  17. cary fujita

    Oh my, Obama hates when companies operate legally. Wonder why he doesn't just use his pen and phone to unconstitutionally change the tax code? He has no problem changing Obamacare unilaterally.

    July 24, 2014 09:58 am at 9:58 am |
  18. Rudy NYC

    Joel

    Not paying taxes = Unamerican? What does that say about the almost half of the population that pays no income taxes?
    -----------------------–
    Republicans have already said it, "They're not one of us."

    July 24, 2014 10:00 am at 10:00 am |
  19. Regular Reader

    Obama is right! However, he needs to start with jeff Immelt, chairman of GE, who heads up Obama's economic council on creating American jobs. GE pays no us taxes.

    July 24, 2014 10:00 am at 10:00 am |
  20. ifhorseshadgods

    If tax "dodging" is un-American do we need to eliminate all the loopholes/deductions for those of us who choose to have kids or have a mortgage, etc?

    Basically, when a company moves it's headquarters to another country they ARE renouncing their corporate citizenship. We need to make the US a better environment for businesses, not threaten them with even greater taxation or punishment. This president needs to see things from a perspective greater than the here and now of each election (for his party) or his "legacy.

    July 24, 2014 10:00 am at 10:00 am |
  21. Someone

    @JPerez
    Free public education is also socialistic, so should we remove that? Didn't think so. Socialism has no boundaries. So stop acting like Americans don't like socialism, because a lot of Socialist ideas are used in this country.

    July 24, 2014 10:00 am at 10:00 am |
  22. Francisco Escobedo

    Such an Incompetent in Chief we have. Legal tax avoidance should actually be a duty of any corporation, since they should always try to maximize shareholder return. When will these politicians learn? If you make taxation harsher, corporations will try to find a way to avoid this, maybe leaving the country. Why not take a tax friendly approach instead? You may end up bringing back a lock of firms, and actually increasing the tax revenue.

    July 24, 2014 10:01 am at 10:01 am |
  23. jenn, philadelphia

    So I guess the President, his wife and the Bidens just pay whatever tax they're told they owe, right? They don't itemize or deduct, because that would be using "loopholes" to not pay their fair share.

    July 24, 2014 10:01 am at 10:01 am |
  24. Fair is Fair

    Sure

    @Fair – A flat tax that removes all loopholes would work...
    ---–
    Sure. How about a flat tax of 50%? Would that work for you? See how that works. It's not a flat tax that you want. It's a tax CUT that you THINK you will get if there's a flat tax.
    ------
    Wrong. A flat tax would reduce the insane buraucracy at the IRS, would make sure that some of the largest corporations in this country pay SOMETHING (think GE with $14 Billion in profits that didn't pay a thin dime), would allow the average American to file by themself, and maybe, just maybe, reduce the percentage of those individuals paying absolutely NOTHING to something less than 49%.

    July 24, 2014 10:02 am at 10:02 am |
  25. gregrobert

    Unamerican? Greed is the essence of America.

    July 24, 2014 10:03 am at 10:03 am |
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