Saturday, February 28, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Obama wants limits on US company mergers abroad

Barack Obama

President Barack Obama addresses the crowd at Los Angeles Trade-Technical College in Los Angeles on Thursday July 24, 2014. (AP Photo/Orange County Register, Ed Crisostomo, Pool)

By
From page A5 | July 25, 2014 |

LOS ANGELES — Staking out a populist stand ahead of the midterm elections, President Barack Obama on Thursday demanded “economic patriotism” from U.S. corporations that use legal means to avoid U.S. taxes through overseas mergers.

“I don’t care if it’s legal,” Obama declared. “It’s wrong.”

Obama and congressional Democrats are pushing to severely limit such deals, a move resisted by Republicans who argue the entire corporate tax code needs an overhaul. At issue are companies that enter into arrangements with foreign companies, shifting their tax addresses overseas while retaining their U.S. headquarters.

“They’re technically renouncing their U.S. citizenship. They’re declaring they are based someplace else even though most of their operations are here,” Obama said at a technical college in Los Angeles. “You know, some people are calling these companies corporate deserters.”

He also charged that such companies are “cherry-picking the rules.”

Though Obama included a proposal to rein in such mergers and acquisitions in his 2015 budget, his speech marked a new, more aggressive focus on the subject.

The push came amid a developing trend by companies to reorganize with foreign entities through deals called “inversions” partly to reduce their tax payments in the U.S.

It also came ahead of the fall political campaign as Democrats seek to draw sharp contrasts with Republicans by portraying them as defenders of corporate loopholes. Sen. Elizabeth Warren, D-Mass., and others have been drawing praise from liberal arms of the Democratic Party for their overtly populist positions.

The growth of inversions has also concerned Republicans, but by and large they have called for a broader tax overhaul that would reduce corporate rates.

A total of 47 U.S.-based companies have merged with or acquired foreign businesses over the past decade in inversions, according to the Congressional Research Service. The issue gained attention earlier this year when Pfizer made an unsuccessful attempt to take over British drugmaker AstraZeneca. The deal would have allowed Pfizer to incorporate in Britain and thus limit its exposure to higher U.S. corporate tax rates

Most recently, Walgreen Co., the drug store chain that promotes itself as “America’s premier pharmacy,” is considering a similar move with Swiss health and beauty retailer Alliance Boots.

Obama, speaking in shirt sleeves under a hot sun in a campaign rally atmosphere, sought to shame companies seeking such deals even though he mentioned none by name.

“You don’t get to pick the tax rate you pay,” Obama told a crowd of about 2,000. “Folks, if you are secretary or a construction worker you don’t say, ‘You know, I feel like paying a little less so let me do that.’ You don’t get a chance to do that. These companies shouldn’t either.”

He added: “You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers.”

The speech came at the end of a three-day West Coast fundraising tour. Obama employed many of the same partisan themes in his speech at the college that he did exhorting donors to help the Democratic Party.

“What really is going on is the Republicans in Congress are directly blocking policies that would help millions of Americans,” he said.

The Obama administration began to ramp up attention to inversion transactions last week with a letter from Treasury Secretary Jacob Lew to House and Senate leaders. Lew said such deals “hollow out the U.S. corporate income tax base.”

Obama is calling on Congress to enact legislation that is retroactive to May, arguing that will stop companies from rushing into deals to avoid the law.

Senate Democrats picked up the call this week, with Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, sending a letter to Walgreen President and CEO Gregory Wasson urging him and his board to reconsider the overseas deal.

“I believe you will find that your customers are deeply patriotic and will not support Walgreen’s decision to turn its back on the United States,” Durbin wrote.

On Wednesday, Senate Majority Leader Harry Reid weighed in with a floor speech that called inversions a “corporate citizenship scam.”

Walgreen’s spokesman Michael Polzin said the company is evaluating where to take its partnership with Alliance Boots. “We will do what is in the best long-term interests of our customers, employees and shareholders,” he said.

Under such inversion deals, U.S.-based, multinational companies can lower their tax bills in part by combining with a foreign company and reorganizing in a country with a lower tax rate. The United States has a 35 percent income tax rate, the highest in the industrialized world, and unlike many other countries it also taxes income earned overseas and then brought home.

Under current law, shareholders of a U.S. company that merged with an offshore entity would have to own less than 80 percent of the combined entity to take advantage of a lower foreign tax rate. Obama’s budget proposes slashing that cutoff to 50 percent and making the restriction retroactive to last May.

Republicans such as Sen. Orrin Hatch of Utah say the U.S. first must change its policy of taxing income earned abroad. But in a hearing this week, Hatch also said he was open to addressing the issue directly provided it was not retroactive and did not generate additional revenue.

“Ultimately, the best way to solve this problem will be to reform our corporate and international tax system in a manner that will make our multinationals competitive against their foreign counterparts,” he said.

Administration officials estimate the deals, if allowed to continue, will cost the U.S. Treasury $17 billion in lost revenue over the next decade.

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

US / World

Man shoots wife, himself at Northern Calif. retirement home

By The Associated Press | From Page: A3

 
 
Thieves crash car through electronics store in San Francisco

By The Associated Press | From Page: A4

 
Some California farmers to go without federal water

By The Associated Press | From Page: A4, 2 Comments | Gallery

US, Liberia start 1st formal test of ZMapp Ebola virus drug

By The Associated Press | From Page: A5

 
US appeals court: Marathon bombing trial can stay in Boston

By The Associated Press | From Page: A5

 
Congress OKs 1-week bill to keep Homeland Security open

By The Associated Press | From Page: A5, 2 Comments | Gallery

US rescinds rule requiring judges to move to Guantanamo

By The Associated Press | From Page: A5

 
Woman knocked out by eggs

By The Associated Press | From Page: A9

Mexico official: Police capture top capo ‘La Tuta’ Gomez

By The Associated Press | From Page: A10 | Gallery

 
Well-educated ‘Jihadi John’ no surprise to experts

By The Associated Press | From Page: A10

Unmasking of ‘Jihadi John’ as a London lad shocks Britain

By The Associated Press | From Page: A10

 
.

Opinion

A remedy for veterans’ care

By Bill Frist And Jim Marshall | From Page: A8

 
Editorial Cartoon: Feb. 28, 2015

By Daily Republic Syndicated Content | From Page: A8

How GOP can resolve immigration mess

By Ramesh Ponnuru | From Page: A8, 10 Comments

 
Unlikely winners of Greece’s surrender on euro

By Mark Gilbert | From Page: A8

.

Living

Community Calendar: Feb. 28, 2015

By Susan Hiland | From Page: A2

 
Today in History: Feb. 28, 2015

By The Associated Press | From Page: A2

Horoscopes: Feb. 28, 2015

By Holiday Mathis | From Page: A7

 
Poem about heaven helps dog owners when beloved pet dies

By Kathy Mitchell and Marcy Sugar | From Page: A7, 1 Comment

Coca-Cola bottle as art? Atlanta’s High Museum takes a look

By The Associated Press | From Page: B8

 
.

Entertainment

 
TVGrid

By Daily Republic Syndicated Content | From Page: B9

.

Sports

 
Vaca advances three wrestlers into semis at Masters

By Daily Republic staff | From Page: B1

 
Spurs snap 4-game skid, beat short-handed Kings 107-96

By The Associated Press | From Page: B1

Thompson scores 25 points, Warriors rout Raptors 113-89

By The Associated Press | From Page: B1

 
Casey McGehee’s move to Giants a homecoming of sorts

By The Associated Press | From Page: B1

Browns agree to terms with quarterback Josh McCown

By The Associated Press | From Page: B2

 
Kyle Busch released from hospital following foot surgery

By The Associated Press | From Page: B2

 
Bulls expect Derrick Rose back this season from knee surgery

By The Associated Press | From Page: B2

Testimony: Several Hernandez texts are missing from phone

By The Associated Press | From Page: B2

 
Approaching ‘last call’ for NHL GMs to tweak rosters

By The Associated Press | From Page: B2

PGA Tour to move Match Play to Texas

By The Associated Press | From Page: B2

 
Notre Dame president credited for transforming school dies

By The Associated Press | From Page: B2

MLS Commissioner Garber: Hopeful season will start on time

By The Associated Press | From Page: B2

 
Travis Kvapil’s NASCAR car stolen from hotel before race

By The Associated Press | From Page: B2

McIlroy to miss cut at Honda Classic; Reed leads

By The Associated Press | From Page: B2

 
NHL fines Sharks’ Couture $5,000 for tripping from behind

By The Associated Press | From Page: B2

 
This date in sports history for Saturday, Feb. 28, 2015

By The Associated Press | From Page: B4

.

Business

Gas prices soar in California as supply shrinks

By The Associated Press | From Page: A1, 1 Comment | Gallery

 
Tribes from around US gather to discuss legal marijuana

By The Associated Press | From Page: B5

Uber says database containing driver info was breached

By The Associated Press | From Page: B5

 
Signed contracts to buy US homes rise to 18-month high

By The Associated Press | From Page: B5

Fiat Chrysler recalls 467K SUVs for possible stalling

By The Associated Press | From Page: B5

 
Southwest nearly done inspecting planes that were grounded

By The Associated Press | From Page: B5

 
5 reasons US economy is stronger than Q4 GDP suggests

By The Associated Press | From Page: B5 | Gallery

.

Obituaries

Gabriel T. Traub

By Nancy Green | From Page: A4, 1 Comment

 
Maria Kraszewski

By Nancy Green | From Page: A4

.

Comics

B.C.

By Daily Republic Syndicated Content | From Page: A6

 
Peanuts

By Daily Republic Syndicated Content | From Page: A6

Rose is Rose

By Daily Republic Syndicated Content | From Page: A6

 
Zits

By Daily Republic Syndicated Content | From Page: A6

Pickles

By Daily Republic Syndicated Content | From Page: A6

 
Baldo

By Daily Republic Syndicated Content | From Page: A6

Sally Forth

By Daily Republic Syndicated Content | From Page: A6

 
Garfield

By Daily Republic Syndicated Content | From Page: A6

Blondie

By Daily Republic Syndicated Content | From Page: A6

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: A6

Get Fuzzy

By Daily Republic Syndicated Content | From Page: A6

 
Beetle Bailey

By Daily Republic Syndicated Content | From Page: A6

Dilbert

By Daily Republic Syndicated Content | From Page: A6

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: A6

Baby Blues

By Daily Republic Syndicated Content | From Page: A6

 
Frank and Ernest

By Daily Republic Syndicated Content | From Page: A6

Sudoku

By Daily Republic Syndicated Content | From Page: A7

 
Bridge

By Daily Republic Syndicated Content | From Page: A7

Crossword

By Daily Republic Syndicated Content | From Page: A7

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: A7

Cryptoquote

By Daily Republic Syndicated Content | From Page: A7

 
.

Home Seller 2/28/2015

Right at Home: Decor made of bicycle parts

By The Associated Press | From Page: HSR2Comments are off for this post | Gallery

Real estate transactions for Feb. 28, 2015

By Daily Republic | From Page: HSR3

Average US rate on 30-year mortgage rises to 3.80 percent

By The Associated Press | From Page: HSR3