Under growing pressure from some Senate Democrats, the White House on Tuesday left open the possibility President Obama will use executive authority to reform the nation’s tax code.
The potential changes would apply to companies that Mr. Obama has dubbed “corporate deserters” — firms that acquire a small competitor from another country and then move their headquarters to that country in order to avoid U.S. corporate tax rates. The U.S. has the highest corporate tax rate in the developed world.
Mr. Obama has zeroed on the practice — known as “inversion” — in recent weeks and has pressed Congress to address it. Right now, it’s entirely legal.
But with congressional action unlikely in the short term, a trio of high-profile Democrats on Tuesday wrote to the president and urged him to use executive power to stop inversion.
Sens. Dick Durbin of Illinois, Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island said that even though they’ve introduced legislation to end the practice, the president shouldn’t wait any longer.
“Our efforts should not preclude executive action to prevent corporate inversions. The coming flood of corporate inversions justifies immediate executive action,” they said.
Asked about the letter, the White House would not rule out executive action.
“If there is any sort announcements that we have to make about steps the president could take unilaterally, we’ll announce it at a later time. I’m not in a position to make any announcements like that now,” White House press secretary Josh Earnest told reporters. “But it is our view that Congress should take the necessary step to address this loophole.”
In an interview with CNBC last month, Mr. Obama said that while inversion is legal, it’s still morally wrong. American businesses, he said, must act as “good corporate citizens” in addition to focusing on high profits.
“It is true that there are a lot of things that might be legal that probably aren’t the right thing to do by the country,” the president said.