Money Minute: Obama Targets Corporate Tax Dodgers

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The party may soon be over for companies trying to dodge U.S. taxes through so-called "inversions."

Inversions, where a U.S. company buys a firm in a foreign country and relocates there to avoid paying U.S. corporate taxes, which are among the highest in the world, are becoming the target of the Obama administration. It's a move that has become very popular lately particularly among pharmaceutical companies. But the president wants it to stop.

corporate taxes treasury jack lew
Saul Loeb, AFP/Getty ImagesTreasury Secretary Jacob "Jack" Lew
Treasury Secretary Jack Lew spoke at a conference Wednesday encouraging Congress to enact laws that would ban the practice immediately and retroactive to May. That could jeopardize deals in the works for Medtronic (MDT) and Mylan (MYL).

As part of Lew's discussion on business reform he also said the tax rate for corporations could be lowered to the 20 percent range, which is a big improvement from the current top rate of 35 percent.

BMW is recalling roughly 1.6 million more of its 3-Series cars from model years 2000 to 2006. The issue has to do with air bags in the front passenger seat that when deployed could cause fragments of metal to hit passengers' faces. The air bag inflator is made by Takata, which has been responsible for millions of recalls over the past few years. This week's BMW recall is a much larger one but not the first related to the air bags. Last year it recalled 42,000 3-Series models for the same problem.

In trading Wednesday on Wall Street, the bulls beat the bears with the Dow Jones industrial average (^DJI) gaining 77 points, the Nasdaq composite (^IXIC) up 9 points and the Standard & Poor's 500 index (^GPSC) picking up 3 points.

When flying nowadays, you are constantly nickeled and dimed for things you once didn't have to pay a penny for and the airlines have come to rely on that revenue. Airlines around the world took off with $31.5 billion in fees last year. Adjusted for inflation that is more than 11 times the fee revenue just six years ago. Most of the fees -- 60 percent of them -- come from credit card companies paying airlines for frequent flyer miles it then offers to its customers. Of the money coming out of our pockets, the biggest revenue came from baggage fees followed by fees for things like drinks on board and advanced boarding. Three U.S. airlines topped the list for bringing in the most non-fare revenue: Delta (DAL), United (UAL) and American (AAL).

And finally, home-sharing website Airbnb, which has faced legal challenges in many cities around the world, including New York City and San Francisco, has just rebranded itself to give itself a new identity. While it features an entirely new looking website with video, it is its logo that is creating the most buzz among social media sites. Let's just say it's a little suggestive. The company says it is meant to look like an upside-down heart but does anyone really buy that? One thing's for sure. The campaign has worked so far. For a rebranding, it's getting lots of play.

-Produced by Karina Huber.


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47 Comments

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John

There goes black america!

July 17 2014 at 7:27 PM Report abuse rate up rate down Reply
rivera8787

He only has to look as far as Hollywood with all the actors and rappers......THEY'RE the ones not paying taxes. Oh wait if he did that he couldn't hang out with Z-J and Heyonce......

July 17 2014 at 4:35 PM Report abuse rate up rate down Reply
bnapoli

Obama could screw up a funeral.

July 17 2014 at 4:19 PM Report abuse -1 rate up rate down Reply
map1246

Companies will continue to flee the Obama regime. There is nothing Obama or his minions can do to stop the exodus except resign.

July 17 2014 at 3:54 PM Report abuse +2 rate up rate down Reply
whstokey

If the Federal tax rate ever goes to 20% it will be 20% with not deductions so what they are saying is they want a 20% effective rate. Since that would mean the consumer would be paying for it in the goods a services why don't all the supporters of this approach say how much more they are willing to pay for Made In America than a foreign competitors products. Be careful; if you get what you are asking for the only folks that will win are those involved with the Federal Government. Once they kill off the private sector job creators you can count on being next. The only thing that does work is being competitive first, last and always so that you can sustain paying good wages & fringe benefites while growing opportunities in the private sector. Government consumes wealth faster than the private sector can create wealth so increasing taxes to increase spending in the public sector is, was and always will be a loser.

July 17 2014 at 3:07 PM Report abuse -1 rate up rate down Reply
ddstan1120

When I first read the headline, I was sure that Obama was going after members, both past and present, of Congress and the Senate. Perhaps they can look into Hillary and Bill's tax returns, now they are no longer "flat broke, and in debt". LOL

July 17 2014 at 2:48 PM Report abuse +2 rate up rate down Reply
Jim

Notice how Mr. Lew said COULD be lowered to 20%(still to high) he never said they WOULD be lowered. You have to watch the verbiage of this corrupt admin very carefully

July 17 2014 at 2:31 PM Report abuse -2 rate up rate down Reply
1 reply to Jim's comment
sam54ct

Our Corporate tax rate was highest under Reagan 40% - 51% depending on profits, it was lowered to its current 35% rate by Clinton, thus Bush ant the GOP, along with Obama and the Dems had years to make change and did zip, so grow a pair, and place blame where it belongs, on both Parties.

July 17 2014 at 3:38 PM Report abuse -1 rate up rate down Reply
eeverettm

Tax us to death so that we are in debt to him and his kind. King Tut wants total control of us.

July 17 2014 at 2:25 PM Report abuse rate up rate down Reply
2 replies to eeverettm's comment
scottee

the majority are letting him totally control us. the tea party movement was our only hope but the entrenched politicians of both parties are demonizing this movement. wonder why???

July 17 2014 at 2:45 PM Report abuse +1 rate up rate down Reply
1 reply to scottee's comment
hsenpfeffer

The only "movement" the teabagger party consists of is a bowel "movement"

July 17 2014 at 4:08 PM Report abuse +1 rate up rate down
sam54ct

Rates were highest under Reagan, so you must be referring to his time in office. Our current 35% rate was set by Clinton, thus Bush did zip to lower Corporate taxes.

July 17 2014 at 3:39 PM Report abuse -1 rate up rate down Reply
clark8642

We need tax reform but it is not likely to happen any time soon. Still, glad to see the President picking up on the topic which was the subject of a good discussion by Allan Sloan last week. In the meantime could we please see a list of names of those who took advantage of the amnesty program for those who used Swiss Banks to illegally avoid taxes?

July 17 2014 at 2:12 PM Report abuse rate up rate down Reply
democrap2

Democrats, screwing America for generations.

July 17 2014 at 1:33 PM Report abuse +4 rate up rate down Reply
1 reply to democrap2's comment
sam54ct

Actually, Corporate tax rates were highest under Reagan 40% - 51% depending on profit levels, and if I recall correctly, he was a Republican. The lowest rates were under Democrat's, the scales showing rates from 1902 - Present are online for viewing, feel free to educate yourself. Our current 35% rate being set by Clinton, thus giving Bush and the GOP the chance to lower rates, which they did not do.

Find another Party to support, you make us intelligent Republicans also look stupid.

July 17 2014 at 3:43 PM Report abuse -1 rate up rate down Reply