President Obama is keeping up the pressure on companies that change to a foreign address just to avoid paying taxes in the U.S.
In his weekly address Saturday, Obama reiterated his call for Congress to pass legislation ending the “unpatriotic tax loophole” that allows some companies to pay fewer taxes.
“Even as corporate profits are as high as ever, a small but growing group of big corporations are fleeing the country to get out of paying taxes,” Obama said. “They’re keeping most of their business inside the United States, but they’re basically renouncing their citizenship and declaring that they’re based somewhere else, just to avoid paying their fair share.”
Even though “the vast majority” of U.S. companies pay what they owe, he added, some are able to “cherrypick” which taxes they pay by swallowing up a smaller foreign company and shifting their official address overseas.
The process is “totally legal” Obama said, but also “totally wrong.”
Companies such as prescription giant Pfizer, pharmacy chain Walgreens and Web searching titan Google have all been in the news this year for trying to take advantage of the scheme to avoid taxes stateside.
Obama this week has been putting the tax-shifting process, known as inversions, in the spotlight. Earlier in the week, he blasted “corporate deserters” in a speech at a technical college in Los Angeles.
The push has lined up with the populist message of some Democrats in Congress, who are pushing to ban the process retroactively back to May.
Republicans have said that the issue should be dealt with as part of a broader tax reform package, but Obama has bucked that call.
Obama agreed that the “best way to level the playing field” is through more general tax reform that lowers the corporate rates and simplifies taxes for everyone, but said anti-inversion legislation should not have to wait for that.
“Stopping companies from renouncing their citizenship just to get out of paying their fair share of taxes is something that cannot wait,” he said in his weekly address.
“Democrats in Congress have advanced proposals that would do the same thing,” he added. “A couple Republicans have indicated they want to address this too, and I hope more join us.”