Because Congress is failing to act, Obama will take his pen and phone to our tax laws. Mr. Obama will likely begin by moving to prevent American companies from reincorporating overseas to avoid paying higher U.S. taxes, says the Huffington Post.
He could encourage companies to stay in the United States by not having the highest corporate tax rate in the world, but he’d rather increase taxes and violate the constitution by rewriting tax law from the White House with his pen.
Mr. Obama has declared tax inversions unpatriotic and is pushing Congress to stop them as the election nears. Mr. Obama uses the term “economic patriotism” to describe his belief that corporations must pay more taxes.
Economic patriotism is a term coined by former Democratic Governor Ted Strickland during the last presidential election. Mr. Obama uses the socialism-light phrase to mean a patriotism that is rooted in “the belief that growing our economy begins with a strong and thriving middle class.” What it really means is the rich must pay more. They can never pay enough.
This is Obama’s reincarnation of his hate the rich, make corporate America pay their fair share spiel which has been a successful campaign pitch over the last six years.
Treasury Secretary Jacob Lew warned last month that Obama has examined the tax code (between fundraisers and golf) and has decided that we need new laws. Last Tuesday, Treasury said Obama is looking for ways to provide a partial fix to tax laws and corporate tax inversions are a target. They are an easy target.
“Treasury is reviewing a broad range of authorities for possible administrative actions that could limit the ability of companies to engage in inversions, as well as approaches that could meaningfully reduce the tax benefits after inversions take place,” the department said in a statement.
Tax inversions allow U.S. businesses to merge with or acquire foreign companies in countries with lower tax rates. The companies can then lower their tax bills by assuming the lower rate. U.S. companies maintain their U.S. headquarters generally as well as control of the companies. Obama wants them to pay higher taxes.
Could the companies leave the U.S. all together if he unilaterally changes the law and bypasses Congress?
Inversions are a problem but how to solve it is a bigger problem.
Companies are in business to make money. It is the foundation of capitalism. This move is simply another attack on capitalism.
Where the money will come from, if the relentless attacks fundamentally transforming our system, is a question. Big Government cannot create wealth and relies on taxpayer money.
Walter Williams, who occasionally guest hosts the Rush Limbaugh program, once said, “Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.”
Rush Limbaugh said this on his show December 3, 2013:
“Capitalism is made up of people who are forever dreaming about coming up with ways to make life better. Capitalism is about improving the quality of life, improving the standard of living for as many people as possible. That takes us back to: It’s not possible for everybody to be the same. So the socialists play on this class envy business. “Well, it’s not fair that X should have all of that. Not everybody does, so it isn’t fair.” So they say we need to do what the left always does, what socialists always do to “equalize” society.”
“They never elevate the people at the bottom. They always try to penalize the people at the top and take away from them and blame them for the inequities and the problems in society. But it doesn’t stop with economics. Then they go after what people say. Then they go after the way certain people live. They have to make sure that anything that creates human triumph is discredited, because that sends the wrong signal to a socialist or communist government. You can’t have exceptions on the plus side.”
“You simply can’t.”
The United States has the highest corporate income tax rate in the industrialized world at 35%. The U.S. also taxes income that’s earned overseas but brought back to the U.S. Democrats want to keep the high taxes and Republicans want to lower them.
Whatever moves Mr. Obama takes could be interpreted as an effort to portray Democrats as strong advocates of the middle class ahead of the November elections. It’s been a vote getter in the past.