President Barack Obama on Tuesday drew parallels between the revelations in the so-called Panama Papers and the practice of corporate inversions.
His comments came after the massive leak of documents from the internal database of a global law firm based in Panama that revealed the offshore holdings of 140 public figures.
In a press conference Tuesday, Obama said the practice of corporations and wealthy individuals avoiding taxes was a “huge problem.”
“There is no doubt that the problem of global tax avoidance generally is a huge problem,” Obama said, referring to the leak.
He continued: “There has been some progress made in coordinating between tax authorities in different countries. But as I said before, a lot ot this stuff is legal, not illegal. And unless the United States and other countries lead by example in closing some of these loopholes and provisions, then, in many cases, you can trace what’s taking place, but you can’t stop it.”
Obama held the press conference to promote the Treasury Department’s new package of rules on Monday aimed at disincentivizing tax inversions, the process by which companies move their tax bases overseas to avoid high corporate tax rates.
Obama said the issue of corporate inversions is different than the movement of money detailed in the Panama Papers. But he stressed that the US needs to work more with foreign partners to ensure that the US prevents companies and wealthy individuals from attempting to escape paying what he called their “fair share” in taxes.
“The basic principle of making sure that everyone is paying their fair share and that we don’t just have a few people who are able to take advantage of tax provisions, that’s something we really need to pay attention to,” Obama said. “Because this is all net outflows of money that could be spent on pressing needs here in the United States.”
He added: “And the volume you start seeing when you see legal tax avoidance with illicit tax avoidance…this is not just billions of dollars, this may be trillions of dollars worldwide.”