LOS ANGELES -- President Obama on Thursday called on Congress to end a corporate tax loophole that allows American companies to move their headquarters overseas in order to pay lower taxes.
Speaking under a searing sun at Los Angeles Trade-Technical College, Obama admitted that the practice, known as inversion, is legal. But he said it is "wrong," and questioned the patriotism of companies that renounce their citizenship in order to game the U.S. tax system.
"You shouldn’t get to call yourself an American company only when you want a handout from American taxpayers," Obama said to a rowdy crowd flanked by palm trees, and urged what he said earlier in his speech is a recalcitrant Congress to pass legislation that closes the “unpatriotic tax loophole.” Obama proposed doing so in his budget earlier this year, and there are Democrat-sponsored bills in Congress that would do so.
Obama wants Congress to pass "thorough tax reforms" that lower the corporate tax rate and "simplifies the tax code so people don't game it." But he said Congress "hasn't done anything, as usual," to fix the system. Congressional Republicans, Obama said, are "promoting policies that harm millions of Americans," including voting to give the rich a massive tax cut. Instead, he said, they need to focus on ensuring American companies don't try to move offshore for tax purposes.
"If you’re a secretary or a construction worker you don’t say I feel like paying a little less," as many companies are doing, the president said.
Obama returned to a phrase that he has been using a lot lately: economic patriotism. That doesn't include moving a company outside the United States in order to reduce a tax bill, he said.
"Instead of doubling down on top-down economics, I want an economic patriotism that says we rise or fall together, as one nation, and as one people," Obama said. "Economic patriotism says it's a good thing when we close wasteful tax loopholes and invest in education, and invest in job training that helps the economy for everybody."
Michael Steel, a spokesman for House Speaker John A. Boehner (R-Ohio) disagreed with Obama's plans.
“Under President Obama, the United States has the highest corporate tax rate in the developed world. It doesn’t have to be that way: comprehensive tax reform would reduce deductions and lower tax rates for everyone," he said. "But until the White House endorses our tax reform plan or convinces Senate Democrats to act, every pink slip from companies moving overseas may as well be signed, ‘President Barack H. Obama,’” Steel said in a statement.