| LOS ANGELES, July 24
LOS ANGELES, July 24 U.S. President Barack Obama
will call on Thursday for an end to a corporate loophole that
allows companies to avoid federal taxes by shifting their tax
domiciles overseas in deals known as "inversions," White House
Obama will make the comments during remarks about the
economy at Los Angeles Technical College. The president is in
California on a three-day fundraising swing for Democrats.
So-called inversion deals occur when a U.S. company acquires
or sets up a foreign company, then moves its U.S. tax domicile
to the foreign company and its lower-tax home country.
Nine inversion deals have been agreed to this year by
companies ranging from banana distributor Chiquita Brands
International Inc to drugmaker AbbVie Inc and
more are under consideration. The transactions are setting a
record pace since the first inversion was done 32 years ago.
Several Democrats have offered bills to curb inversions,
which let companies cut their taxes primarily by putting foreign
earnings out of the reach of the Internal Revenue Service.
Obama will throw 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.
The proposed changes, already put forward in Obama's annual
budget, would be retroactive to May of this year and implemented
independently of moves to achieve broader tax reform.
"We have seen increased activity from companies in the
inversion space and as a result the president's view ... is that
we should be acting as quickly as possible," a White House
official told reporters on a conference call.
"That will buy us more time and space to ... reform our tax
code as a whole."
Republicans prefer a change to inversions to be part of an
effort to reform the U.S. tax code.
The White House supports broad tax reform but argues that
action on inversions is needed now.
"We can't afford to wait to reform our tax code completely
to deal with inversion," the official said, adding that such
deals would cost the United States an estimated $17 billion in
revenue over the next decade.
(Additional reporting by Kevin Drawbaugh in Washington; Editing
by Ron Popeski)