President Barack Obama speaks about the economy at the Los Angeles Trade-Technical College in Los Angeles, Thursday, July 24, 2014, on the final day of his three-day West Coast trip. Striking a populist stand ahead of the midterm elections, Obama is demanding 'economic patriotism' from American corporations that seek overseas mergers to avoid U.S. taxes. Obama and congressional Democrats are pushing to severely limit such deals, a move resisted by Republicans who argue the entire corporate tax code needs an overhaul. (AP Photo/Ringo H.W. Chiu)
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WASHINGTON - President Barack Obama called companies that re-incorporate overseas to avoid taxes 'corporate deserters' on Thursday, stepping up a drive to close a tax loophole that could affect deals already in the works for Walgreens and AbbVie, two giant firms headquartered in Chicago's suburbs.
At issue are mergers between U.S. corporations and smaller foreign companies that legally allow a U.S. company headquarters to relocate - mainly on paper - to a nation with lower tax rates.
It is a perfectly legal tax-avoidance strategy, but one that Obama and many Democrats find indefensible. Taking on 'inversion' - the technical term for the overseas relocations - is becoming a rallying cry of the progressive wing of the Democratic family and could prove potent in the run-up to the November elections.
Republicans counter that businesses are justified in taking logical steps to enhance profitability in the wake of high U.S. corporate tax rates and say the government should keep out of the way.
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