LOS ANGELES (Reuters) - U.S. President
Barack Obama will call on Thursday for an end to a corporate loophole
that allows companies to avoid federal taxes by shifting their tax
domiciles overseas in deals known as "inversions," White House officials
said.
Obama will make the comments during remarks about the economy at
Los Angeles Technical College. The president is in California on a
three-day fundraising swing for Democrats.
So-called inversion deals occur when a U.S. company acquires or sets
up a foreign company, then moves its U.S. tax domicile to the
foreign company and its lower-tax home country.
Nine inversion deals have been agreed to this year by companies
ranging from banana distributor Chiquita Brands International Inc to
drugmaker AbbVie Inc and more are under consideration. The
transactions are setting a record pace since the first inversion was
done 32 years ago.
Several Democrats have offered bills to curb inversions, which let
companies cut their taxes primarily by putting foreign earnings out
of the reach of the Internal Revenue Service.
Obama will throw his weight behind the Democratic bills, calling for
a rule change that would deem any company with half of its business
in the United States to be U.S.-domiciled.
The proposed changes, already put forward in Obama's annual budget,
would be retroactive to May of this year and implemented
independently of moves to achieve broader tax reform.
"We have seen increased activity from companies in the inversion
space and as a result the president's view ... is that we should be
acting as quickly as possible," a White House official told
reporters on a conference call.
"That will buy us more time and space to ... reform our tax code as
a whole."
Republicans prefer a change to inversions to be part of an effort to
reform the U.S. tax code.
The White House supports broad tax reform but argues that action on
inversions is needed now.
"We can't afford to wait to reform our tax code completely to deal
with inversion," the official said, adding that such deals would
cost the United States an estimated $17 billion in revenue over the
next decade.
(Additional reporting by Kevin Drawbaugh in Washington; Editing by
Ron Popeski)
