Obama takes on ‘corporate deserters’

WASHINGTON (TIP): President Barack Obama called companies that re-incorporate overseas to avoid taxes “corporate deserters” on Thursday, July 24, 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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