Last night, President Obama sat down for an interview with CNBC’s Steve Liesman, and the first topic discussed: tax inversions.
Obama is clearly not thrilled with the current state of affairs that, as we’ve highlighted recently, has seen multiple billion-dollar companies make acquisitions to move their tax base overseas.
Liesman asked Obama if moving your tax base is, “unpatriotic or un-American?”
Obama declined to use that exact language, but didn’t completely reject Liesman’s characterization.
From CNBC’s transcript of the interview:
STEVE LIESMAN: Let me dive right in and talk about this issue of tax inversion this issue of American companies going overseas to reduce their U.S. tax bill or get rid of it. I take it you’re not calling it illegal. Are you saying it’s unpatriotic or un-American?
PRESIDENT OBAMA: What I’m saying is that companies thrive in the United States in part because they benefit from the best university system in the world, the best infrastructure — although I’d like to see us do a little better on infrastructure. You know, there are a whole range of benefits that have helped to build companies, create value, create profits. For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes is neither fair, nor is it something that’s going to be good for the country over the long term. And this is basically taking advantage of tax provisions that are technically legal — but I think most people would say if you’re doing business here, if you’re basically still an American company, but you’re simply changing your mailing address in order to avoid paying taxes then you’re really not doing right by the country — and by the American people.
Obama added in a subsequent answer that this kind of strategy “undermines people’s confidence in how companies are thinking about their responsibilities to the country as a whole.”
Yesterday we highlighted this chart from Goldman Sachs, which shows how much pre-tax income, and potential tax revenue, is moving overseas due to inversion deals.
It remains to be seen if anything happens in Congress — and this Bloomberg report from yesterday doesn’t make any action from Capitol Hill seem imminent — but the glut of companies shifting their tax bases out of the U.S. clearly has the President’s attention.