US squabble for corporate tax dollars

Obama Takes Aim at 'Unpatriotic' Corporate Inversions By Dunstan Prial Published July 24, 2014 FOXBusiness President Barack Obama is taking direct aim at the rising number of U.S. companies using international mergers to relocate their headquarters overseas in an effort to avoid paying U.S. corporate taxes. In prepared remarks in a speech scheduled for today at a technical college in Los Angeles, the president urged Congress to pass tax reforms that would eliminate loopholes that allow U.S. companies to shield large portions of their profits overseas. Obama’s public remarks significantly raise the profile of an effort that gained momentum last week with a letter from Treasury Secretary Jacob Lew sent to Congressional leaders in which Lew said such international mergers, called “inversions,” “hollow out the U.S. corporate income tax base.” The president was expected to make a broad call for “economic patriotism,” suggesting that companies that pursue inversions are essentially renouncing their U.S. citizenship in an effort to reduce their corporate tax burdens. Administration officials said ahead of the president’s speech that inversions hurt middle-class Americans who have to pick up the slack when corporations use sophisticated loopholes to shirk their tax responsibilities. Inversions -- and the U.S. corporate tax code -- have come under a higher level of scrutiny since giant U.S. drug maker Pfizer (PFE) announced earlier this year that it planned to merge with London-based AstraZeneca, a move that would have saved it billions in U.S. taxes. The deal fell apart but the issues it raised haven’t gone away. Relocating their legal addresses outside the U.S. for tax purposes is hardly a new phenomenon for companies, but Pfizer is by far the largest and most high-profile company to ever attempt the move.

Through an inversion Pfizer was seeking to reduce its U.S. corporate tax rate of 35% to the much lower 21% in England. The companies that seek inversions say the comparatively-high U.S. corporate tax rate leaves them at a competitive disadvantage to their overseas competitors. Paying a lower tax rate, they say, helps the company reinvest in itself and ultimately benefits shareholders. Tax experts estimate there have been about 50 inversions by U.S. companies over the past few decades, with the pace picking up considerably in recent years. Earlier this year, the Obama administration tucked a measure into a budget bill that would have made the relocation process more difficult for U.S. companies, but the measure never got off the ground in Congress. Obama is now urging Congress to pass the legislation retroactive to May, arguing that will stop companies from rushing into deals to avoid the law. Republicans in Congress, however, have supported broad tax reform that would eliminate loopholes and lower corporate tax rates in an effort to reduce the incentive for companies to relocate in countries with lower tax rates than the U.S. Under current law, shareholders of a U.S. company that merged with an offshore entity would have to own less than 80% of the combined entity to take advantage of a lower foreign tax rate. Obama's budget proposes slashing that cutoff to 50%. Administration officials estimate the deals, if allowed to continue, will cost the U.S. Treasury $17 billion in lost revenue over the next decade. Source - Fox Business - here.

Obama's unlikely to be popular with corporations wanting a free hand.

Sounds like some Americans aren't averse to socialist principles when it comes to grabbing tax dollars.

Don't know how they can predict $17 bil lost revenue in a decade, when there's a variable:  how many companies jump ship and merge.

The Republicans want to lower corporate tax rates, so maybe the Republicans will win next election?

Like how 'mergers' have become 'inversions'. 
That's a good move in the campaign to hold onto tax dollars.

'Inversions hurt the middle-class Americans' is brilliant. 
And so is 'renouncing' US citizenship.
That ought to get Americans waving their pitchforks.  LOL.

Who would have thought a squabble for tax dollars could be this exciting?

John Kerry does the 'full Ginsburg'

Carl P. Leubsdorf:  Kerry makes the most of Ukraine July 24, 2014 Appearing on all five Sunday morning television news shows has become a familiar practice since the term “full Ginsburg” was coined after the first person to accomplish the feat, Monica Lewinsky’s lawyer William Ginsburg, in 1998. Obama administration officials have increasingly employed the practice — notably Secretary of State John Kerry, who last weekend became the second person, after Treasury Secretary Jack Lew, to complete a second “full Ginsburg.” But where Ginsburg’s main impact was to get his name applied to the tactic, Kerry has sought to restore the Sunday shows as major platforms for making news, rather than a forum for repeating past positions and policy conflicts. In September, he used his five TV appearances to disclose that the administration had positive proof that Syria had used the neurotoxin sarin against its civilians. On Sunday, he presented an explicit and convincing case that Russia had supplied the weapon its Ukrainian allies used to shoot down a Malaysian Airlines commercial plane. These appearances were a major part of the secretary of state’s ongoing effort to strengthen both the U.S. voice around the world — and his own — as President Barack Obama’s main spokesman on international issues. In the process, he is also playing a far more public role than his predecessor, Hillary Clinton, who preferred a low-key, diplomatic approach to improve the U.S. image abroad. That may be one reason a Politico poll this week gave her mediocre ratings as secretary of state, along with the fact that, for 18 months, the main publicity surrounding her four years concerned Republican charges that inadequate security in Benghazi was responsible for the death of four Americans. Clinton also had little use for the Sunday morning platform, though it can easily provide news to dominate the headlines and network newscasts on a day where news tends to be spontaneous, rather than planned. “I have to confess, here in public, going on the Sunday shows is not my favorite thing to do,” Clinton told a congressional committee in explaining, perhaps speciously, why she deferred to then U.N. Ambassador Susan Rice on the weekend after the Benghazi terrorism attack. “There are other things I prefer to do on Sunday mornings. … And I did feel strongly that we had a lot to manage, that I had to respond to, and that that should be my priority.” Kerry, however, has eagerly pursued the public pulpit, which often focuses on issues with which he has spent years dealing as a longtime member and later chairman of the Senate Foreign Relations Committee and as the 2004 Democratic presidential nominee.

He has not been reluctant to tackle the more intractable international issues, like the generations-long Israeli-Palestinian dispute, the bloody and complicated Syrian civil war and the Russian effort to destabilize Ukraine both politically and militarily. Kerry’s high-profile efforts have not been trouble-free. On Sunday, he stirred a flap by making what appeared to be very candid comments about the Israeli effort to destroy the Hamas terrorism infrastructure in Gaza in a cellphone conversation that he didn’t realize microphones were picking up. “It’s a hell of a pinpoint operation,” he twice said, apparently referring to Israeli statements its efforts would be limited. A few minutes later, on Fox News Sunday, host Chris Wallace asked if he was “upset that the Israelis are going too far.” “It’s very difficult in these situations,” Kerry replied. “I reacted, obviously, in a way that anybody does in respect to young children and civilians.” Kerry is no stranger to such situations. Some months back, his offhand comment about Syria’s chemical weapons resulted in the Russians suggesting international talks. Kerry’s increasingly high-profile role has coincided with speculation about whether his predecessor, Clinton, will seek the presidency in 2016 and, if she doesn’t, who should be the Democratic nominee. Besides Vice President Joe Biden, there have been sporadic suggestions that Kerry, who came within 118,000 Ohio votes of winning in 2004, would be a strong candidate. But he made clear in a CNN interview last February that once was enough for him. “I’m out of politics,” Kerry told CNN’s Jake Tapper. Besides, judging from his first 18 months, his day job will keep him pretty busy through 2016. Source - Tallahassee Democrat - here.

Cool.  Now I know what the 'full Ginsburg' is.  Kinda.  LOL

Jack/Jacob Lew and John Kerry have been lobbying for anti-Russian economic sanctions (briefly mentioned here), so that's probably what the media round was about.

Jacob Lew and the Obama administration are also having a go at 'unpatriotic' international mergers:

rising number of U.S. companies using international mergers to relocate their headquarters overseas in an effort to avoid paying U.S. corporate taxes. [here]

Lew calls these 'inversions' which:

“hollow out the U.S. corporate income tax base.” [as above, here]

Reference made in the article to expected call for 'economic patriotism'. 

Who would have guessed there was such a thing in a free market economy in the land of the free etc?

I don't understand the significance of Kerry's 'pinpoint' phone call.  It doesn't sound particularly controversial to me, so I don't understand why this keeps coming up in media like it's some big deal rebuke or something, when it's not.

Doubt Clinton will be in the running for Pres, but Kerry might be despite what he says.

The 'news-making' stuff is interesting.  Politicians appear to set the news agenda on the day.