White House 'Going After' Corporations Over Tax Inversion
5:01 PM, Aug 13, 2014 • By JIM SWIFT
White House Principal Deputy Press Secretary Eric Schultz told reporters Wednesday that the White House is studying ways to go after U.S. corporations that elect to undergo a process known as “inversion” and become a foreign-based corporation.
The practice is not new, but has become increasingly popular as efforts to reform the U.S. tax code have become less likely. The U.S. has one of the highest corporate income tax rates in the world, and is one of a small number of nations that subjects corporate profits earned overseas to U.S. taxation when brought back to the U.S. for reinvestment or other uses.
Over a trillion dollars of money earned by U.S. companies abroad is stuck there due to the “worldwide” tax system the U.S. imposes on domestically domiciled corporations, and U.S. companies are put at a disadvantage not being able to reinvest or use in the United States without paying taxes on those earnings.
Here’s the exchange with ABC’s Jonathan Karl:
Bloomberg also recently reported that the Obama administration helped Delphi, a major auto parts supplier, invert to become a British corporation as part of the auto bailout in 2009. In light of this, the Pittsburgh Tribune-Review editorialized that Obama’s calling the practice “unpatriotic” was “hypocrisy.”
The president has previously supported lowering the corporate tax rate to 28 percent. Democrats, however, have been slow to support moving the U.S. from its “worldwide” system of taxation—where foreign earnings by U.S. corporations are subject to U.S. taxation—to a “territorial” system of taxation (used by nearly all modern economies) where foreign earnings are only taxed by the jurisdiction in which they are earned.
You can watch the exchange below:
Recent Blog Posts