President Obama addressed corporate tax reform, and corporate tax inversions specifically, in an interview with Steve Liesman at CNBC by polishing off some of his campaign arguments about fairness in the tax code.
“For you to continue to benefit from that architecture that helps you thrive but move your technical address simply to avoid paying taxes is neither fair nor something that’s going to be good for the country in the long run,” said Obama, who acknowledged that the “tax provisions that are technically legal,” but says they undermine people’s confidence in corporate America.
Obama says fairness should be the goal of tax reform
Tax inversions, which allow US companies to pay lower tax rates by setting up offices in a country with lower rates, has come under criticism recently as Senate Democrats are trying to close the loophole (it’s telling that Obama mentioned Ireland and then through in ‘other countries’ as an afterthought). Obama said that he is willing to lower corporate tax alongside closing loopholes, but that he believes the primary goal of tax reform should be to make a fair and predictable system, not simply to lower effective tax rates. Obama also mentioned wanting to give companies reason to repatriate foreign profits and reinvest them back home and repeated his call to increase taxes on carried interest.
Obama rehashes campaign arguments with better rhetoric
Obama’s call for a fairer tax code, where the companies that benefit from the US business environment (everything from infrastructure to the legal system) should have give back, is reminiscent of one of the biggest gaffes of the 2012 election season: ‘You didn’t build that.’
“Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen,” said Obama.
In context Obama was making the same argument, that businesses owe something to the country and should balance profits with corporate responsibility instead of pursuing the former to the exclusion of the latter. He’s polished up his rhetoric so that he doesn’t come across as anti-business (carefully avoiding the word unpatriotic, suggested by Liesman). But that doesn’t make it any more likely that he’s going to through a major tax bill at this point in his presidency.