With other pieces of his economic agenda such as a minimum wage increase stalled, President Obama turned his attention to corporate taxes Thursday and said U.S. businesses should be concerned not just with profits but also with being “good corporate citizens.”
During a speech in Los Angeles and an interview with CNBC, the president said it was unpatriotic, comparable to renouncing one’s citizenship, and harmful to the U.S. economy for businesses to set up headquarters overseas in order to avoid America’s high corporate tax rate. At 35 percent, the U.S. rate is the highest among the world’s major developed nations.
Mr. Obama didn’t single out any specific companies, but said the whole of corporate America cannot focus only on the capitalist pursuit of higher profits. He conceded, however, that the practice of headquartering abroad to pay less in taxes is, for now, “technically legal.”
“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,” Mr. Obama said during his CNBC interview, which focused mainly on economic matters.
“People are paid to maximize profits but people are also paid to be good corporate citizens. They’re also paid to make sure they’re thinking about, in addition to shareholder value, how do you grow a company over the long term?” he said.
The president called on Congress to pursue a broad corporate tax reform measure, one that closes loopholes allowing companies to escape U.S. taxes and lowers overall rates while broadening the base.
Companies taking advantage of current loopholes, the president said, want the advantages of doing business in America without paying their fair share.
“They don’t want to give up the best universities and the best military and all the advantages of operating in the United States. They just don’t want to pay for it. So they’re technically renouncing their U.S. citizenship,” he said.
But House Republicans argue the president is missing the mark and say that their comprehensive tax plan — which would reduce the number of deductions and lower rates — would benefit average Americans and businesses.
GOP leaders are calling on the Senate to pass their plan, and calling on the president to sign it into law, though that appears extremely unlikely.
“Under President Obama, the United States has the highest corporate tax rate in the developed world. It doesn’t have to be that way,” said Michael Steel, spokesman for House Speaker John A. Boehner, Ohio Republican. “Until the White House endorses our tax reform plan or convinces Senate Democrats to act, every pink slip from companies moving overseas may as well be signed, ‘President Barack H. Obama.’”
Other Republicans say the White House has an opportunity with corporate tax reform, as it’s an issue both parties agree must be addressed.
But getting something accomplished will require a personal initiative by the president, said Kansas Gov. Sam Brownback.
“If he will start working with the Congress, legitimately engage, bring people over to the White House or go over to Capitol Hill and talk to people, I think you’ve got a real shot at tax reform,” he said on CNBC, immediately following the interview with the president.