Obama: Companies that avoid taxes are renouncing citizenship
President Barack Obama plans to go on the offensive later Thursday against companies that use cross-border mergers to avoid U.S. taxes, accusing them of essentially renouncing their American citizenship to shield profits. Bloomberg reports Obama will say in Los Angeles that companies using so-called inversions benefit from the economic advantages of being in the U.S. while adding to the tax burden of middle-class families. Democrats have called for action to stop inversions but analysts say near-term chances of legislation being enacted are very low.
Renouncing citizenship would appear to be a heinous crime, similar to treason. One such criminal, Peter Dunn, also appeared in a MarketWatch article by Al Lewis:
Tax man makes it hard to be an American, Commentary: Tough IRS rules hit the little guys hard
I feel honoured to be in a special class of criminal merely for exercising my universal and fundamental right to change my nationality.
Trying to handcuff companies and individuals to the US Tax system won’t work. It may trap some ‘current’ individuals, but discourages people in future going to the US and getting trapped.
Other countries have this tax base problem, but they’ve done something about it. The US could help their budget woes enormously by enacting VAT. The US relies too heavily on income / corporation tax.
Also many people think the US dollar’s reserve status has years to go. The BRICs are now building alternative infrastructure to challenge the dollar.
On a podcast the presenter made an interesting point, crisis compresses time. A sudden event causes actions to be taken in months that before should have taken years.
This is now the risk for the US dollar. As the BRICs put together the infrastructure waiting in the wings, some sudden event could be enough to dethrone the dollar. That’ll be the situation in a few years. The dollar may cling on for a while, but it’s days are numbered.
I don’t like his wording at all. He knows companies doing inversions is NOT the same as an individual renouncing or relinquishing citizenship. He wants to use that wording to confuse the opinions of home landers further because of the startling uptick in renunciations. Something nasty is coming because he didn’t word it that way for nothing. This way he can add some new even more punitive measure and make everyone think it was about going after big corporations who “off shore” The language he used there was not an accident.
Yes, Atticus. It’s called demagoguery, and Obama has mastered the art. I have joined the criminal class without having committed a crime. I have a right to change nationality. Only demagogue would make an unfavorable comparison like this.
His comments reflect his mentality –
Obama is all about image. The renunciations being higher than at any other time under his watch make him look bad. He can’t have that. To justify what is about to come he’s conflated us with bad tax cheating corporations. Some new harsh measure will come and he will announce as to how he’s been so tough on off shoring corporations who steal from the middle class. All the while knowing it’s the middle class abroad being hammered. I hardly think anything that is coming will be that harsh on “inversions” He doesn’t want to make too many big donors mad right now because he’s going all over the country doing big fund raisers at the moment for the mid terms. Once again we’ll get the hammer and it will be touted as a wonderful thing. The masses will applaud and move on.
Please look under current media and listen to the link that “notthattara” posted. There- the chairman and many of the people being interrogated as experts say that putting a wall around America is NOT the answer. Tax reform is the answer! Not punitive actions. The problem is there is no time as this is an emergency. Which is why I think tax reform should be an absolute priority.
Levin, Schumer, and McCain have only to look at history when building walls to keep people in. They always get out eventually. It may take decades, but they always get out.
Tax reform is the long-term solution that will benefit the US. Handcuffing people and building financial walls is a short-term solution that allows the US to keep the status quo for now, but at long-term cost.
Excellent post .. I liked your 2012 articles….
@Don…You are right about time and an event can accelerate things that may take years.. I think there will be an acceleration of many things, including the diversifying of the dollar. The USA has bases in over 63 countries plus personnel in 156 countries. not to mention the 6000 military bases/warehouses in the USA. That is a lot of control.
@northernstar – So it’s the chicken and the egg. They have the might to enforce the dollar standard, but only as long as they can pay for it.
The day is going to come where they’re limited to the amount of printing can be done. At that point they’re going to have to pick and choose the fights more carefully.
As the Dollar’s percentage of reserves drops vis-à-vis the RMB, it’s going to put more and more pressure on the USG to suck people into US bonds.
Military might can’t necessarily help them with that problem. Remember even if you win the war the after conflict costs continue to mount up.
The Obama administration has made renouncing US citizenship into a new trend. Everyone is doing it now, real people and corporate people alike. Shit-canning US citizenship is now the cool thing to do.
Great job Barack, Carl and Chuck. Your legacies shall be well deserved.
PS. Robert Stack also deserves honorable mention, the paid liar that he is.
Does anyone has an update on Obama’s speech or vid of it?
@Atticus, I am with you. Nefarious deeds are afoot. Announcements like these are like advance troops or that house tapping thing the Israelis do before blowing your house apart. It’s a warm up for an attack.
Obama says, “They’re technically renouncing their U.S. citizenship, they’re declaring their base someplace else even though most of their operations are here. You know some people are calling these companies ‘corporate deserters.'”
Renounce citizenship = deserter
My guess is that they will try to hit the inverting companies with some kind of “exit tax.” Or maybe they will try to slap some kind of tariff on their products being sold in the US.
No doubt they will try to apply some of the punishments that are currently being levied against natural people who renounce or relinquish US citizenship.
American exceptionalism at its finest!
I wonder if Obama realizes how many individual ‘Americans’ overseas don’t have their main ‘operations’ or any operations in the U.S.? With his really poor analogy, he makes it seem that he doesn’t realize that individuals have to live abroad for a few years generally to get a foreign citizenship, especially now that the few places that were coming too close to cash for citizenship have been cracked down on. Tina Turner and Eduardo Saverin just didn’t decide one day to leave the U.S. and get a new citizenship the next day. They aren’t secretly living their lives inside the U.S. and just telling everyone that they live abroad. That’s not how it works.
It continues to become clear that neither the U.S. government nor the IRS understand how U.S. tax laws really apply to U.S. citizens abroad and to the non-U.S. activities of U.S. corporations. The reality is that the tax code is so complex that it can be understood only by tax professionals who specialize in this narrow area.
The problem with Obama is NOT what he doesn’t know. It’s what he knows that isn’t so.
Barack Obama has reached the point where he is an embarrassment to the Office of he Presidency.
Under his leadership the U.S. is turning into the “laughingstock” of the world.
Corporations, I do not believe, may renounce citizenship as they never were legally a citizen in the first place. They don’t need to go to the embassy and get an interview and renounce do they? A little help here please. What do these inverting companies do?
This article does not say “renouncing citizenship.” It uses this language: ” shifting their tax domiciles overseas in deals known as “inversions”.” I believe the “renouncing citizenship” language was language used by the reporter – as they do to try to sensationalise things – and not used by Obama.
“Obama threw his weight behind the Democratic bills, calling for a rule change that would deem any company with half of its business in the United States to be U.S.-domiciled.”
So we see that with Obama’s concern here there is a benefit test to a company. Perhaps we may “invert” this argument and demand a benefit test to US taxation of USP abroad !
It’s amazing how certain Americans (natural persons or corporate entities) are vilified by this administration for doing things that are completely legal (inversions, or paying their punitive exit taxes and getting the hell out of Dodge) while the administration gets away with stuff that is patently illegal (implementing pseudo-treaty IGA’s without Congressional authority, sending goon squads into foreign banks, starting pointless wars with no UN mandate) and then expects to be applauded for that kind of behaviour. It really is sickening.
You know, I still don’t like the Republican Party, but at least I can now better see the Democrats the way they do. Obama’s HuffPost minions are mainly pretentious, hypocritical twits who are generally far less informed and educated than they think they are – especially about foreign affairs of any kind and the plight of expats in particular. In terms of intellect and general “worldliness” I always expected a bit more from Democrats than Republicans, but I realize now that they are certainly no better. If anything, their pseudo-intellectual self-righteousness is even more insufferable than garden variety bible-thumping. In other words, Democrats really should know better, and it’s so maddening to see that they obviously don’t.
The link at the end of the article:
Has a marketwatch article in 2012 with good plug for The Isaac Brock Society. We need more such articles and plugs to build awareness of issues and attention to the site and ADCS.
This is an explanation of what the Obama administration is doing in Ukraine and how it has created the war there, which resulted in the downing of M17:
May we simplify what you say, and a little help here: The Democratic Party has traditionally been known as the party of compassion……
fill in the blank: a nice understandable slogan would be good (instead I go on for too long below)
however, for American citizens living abroad the party has proven insensitive loading much greater taxes on them, much higher penalties on them, requiring much higher “compliance” paperwork burden on them (as if their everyday accounts are foreign accounts of U.S. resident tax cheats) costing much higher for tax advice, and being much more intrusive into basic decisions over everyday private and business life, THAN are required of U.S. citizens living in America. The Democrats have made Americans living abroad 2nd class US citizens in regards to the “inalienable rights” of “liberty” and the “pursuit of happiness” while the U.S. Constitution specifies equality among Americans.
What is needed is an Affirmative Action Plan to address the U.S. government discrimination of US citizens abroad, and the Republicans are the closest party to this with platform to repeal FATCA and discussion to end citizenship based taxation no matter where US citizens choose to live.
I would like a bit of help here in the wording and making it simple and not too over the top, as I will be contacting friends and family stateside and basically asking Republicans and Democrats alike to vote Republican in the upcoming midterm elections in November.
http://yhoo.it/1z9Onah – Obama: What’s legal might not be right for US – Yahoo
* President Barack Obama said Thursday that American companies performing tax “inversions” are not doing right by their country.
– “You are an American company. You continue to benefit in all kinds of ways from being an American company,” the president said. “It is true that there are a lot of things that may be legal that probably aren’t the right thing to do by the country.”/”There are a whole range of benefits that have helped to build companies, create value, create profits,” he added. “For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes, is neither fair, nor is it something that’s going to be good for the country over the long term.”
* Joel Naroff, president of Naroff Economic Advisors, said the practice could hurt small businesses.
“There’s no such thing as a free tax break,” Naroff said, explaining that these large corporations have exploited a loophole in the tax code to the same effect as a legislature-granted break. “If someone doesn’t pay what their fair share of taxes should be, someone else will have to.”
Fair share seems to be a buzzword amongst Americans. I wonder how one would define what “fair share” would be.
For me it’s simple: If you use United States infrastructure, or if you derive some of your income from the United States; then you should pay taxes. However to tax people who have no connection to the United States other than by citizenship (yet make their income from foreign sources) is unconscionable.
My foul-mouthed rant came from the heart as to how I feel about that “entitled” excuse for a Commander-in-Chief they have in the White House.
This may not be the right page on which to post this, but thought I would bring it to all you IBS folks anywhere in the world. This petition against CBT needs some more signatures from anywhere in the world!
This should be a lead article for the IBS website: http://www.vancouversun.com/news/Metro+Vancouver+woman+joins+movement+drop+citizenship/10056687/story.html
@JC you might mention that the Democrats have worsened the already profoundly unjust tax treatment of Amicans living abroad.
And we might ask @Petros or the powers at be for a separate thread on this topic: Letter to stateside family and friends to vote Republican in the November midterm elections.
The Democrats will show their real faces when they put “expats” and “inverting US companies” together in the same sack for the purpose of demonizing both.