The United States has the highest corporate tax rate amongst members of the Organization for Economic Co-Operation and Development at 39.1 percent. In response to this high rate many companies have engaged in what are called inversions where they merge with a company based in a country with a lower tax rate and then move its headquarters there to benefit from the lower tax rate.
Republicans have called for lowering the corporate tax rate for years in fact it is part of their party platform. In its section on tax policy it reads to level the international playing and to spur job creation here at home we call for a reduction of the corporate rate to keep U.S. corporations competitive internationally"
President Barack Obama was elected in part on his promise to reach across the aisle and get things done. When elected president he said he would turn the page on the ugly partisanship in Washington so we can bring Democrats and Republicans together to pass an agenda that works together to pass an agenda that works for the American people."
It would seem this would be the perfect opportunity to work with Republicans to solve this issue which affects our economic wellbeing. Instead the President took executive action in the form of Treasury and IRS regulations to make inversions less attractive for companies to pursue.
This continues the presidents history of going around Congress when his ideology is at stake. He has unilaterally changed immigration law when Congress wouldnt pass the DREAM Act and the Affordable Care Act when it could have negatively affected Democrats during election season. Now he unilaterally changed tax rules because lowering tax rates are anathema to his ideology.
Famously in an interview with Charlie Gibson the President revealed he would even go against evidence to push his agenda. Mr. Gibson asked why he would raise the capital gains tax despite the fact revenues rose after the rates were cut. He responded well Charlie what Ive said is that I would look at raising the capital gains tax for purposes of fairness."
Clearly this ideology is at play with his actions concerning corporate taxes. Prohibiting companies from completing inversions will not add revenue to the Treasury or stop corporate tax avoidance. Secretary of the Treasury Jacob J. Lew admitted as much when he said we know companies will still continue to seek new and creative ways to avoid paying taxes here."
The President however is more concerned with appearances than results. He told reporters Americans deserve to know big corporations arent playing by a different set of rules Ive been pushing for years to eliminate the injustices in our justice system." He doesnt seem to care about playing by the rules when he allows people who broke our immigration laws to be put ahead of those who followed them or when he gave exemptions to Unions concerning Obama care regulations.
If the President really wanted big corporations to play by the same rules he would work with Republicans to lower our corporate tax rate to be more in line with the rest of the OECD. That would incentivize companies to keep their headquarters here and engage in less tax avoidance leading to more revenue for the Treasury. However this wont happen because with this President it is all about pushing his ideology.
