Democratic senators are calling for President Barack Obama to take executive action that would essentially increase the tax burden on many American companies. The White House isn't ruling out a unilateral act, invoking the phrase “economic patriotism” to condemn companies that incorporate overseas.
This photo taken June 25, 2014, shows Sen. Elizabeth Warren, D-Mass., questions Treasury Secretary Jacob Lew as he testifies at a Capitol Hill hearing examining the Financial Stability Oversight Council's annual report to Congress in Washington. (AP Photo/Charles Dharapak) AP Photo/Charles Dharapak
However, when pressed if there were any other unpatriotic tax deductions, White House press secretary Josh Earnest said, “not that I'm aware of, but If you spot any, let me know.”
The letter was signed by Democratic Sens. Dick Durbin of Illinois, Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island.
The Democratic senators said in the letter Tuesday that they have introduced the Stop Corporate Inversions Act.
“However, our efforts should not preclude executive action to prevent corporate inversions. The coming flood of corporate inversions justifies immediate executive action,” the letter said, according to Roll Call.
“The coming flood of corporate inversions justifies immediate executive action,” the letter says.
Corporate inversion is when companies that primarily do business in the United States incorporate in another country to avoid the heavy U.S. corporate tax rates. Put another way, it's when a U.S. company with a foreign subsidiary becomes a foreign company with a U.S. subsidiary.
Earnest didn't rule out unilateral action, but said congressional action is preferred.
“If there is any sort of announcement we could make about steps the president could take unilaterally, we'll announce those at a later time,” Earnest said. “I'm not in any position to make those announcements now.”
"The president has talked a lot in recent weeks about economic patriotism,” Earnest added. “I think tactics like we've seen here are a pretty good example of the need for us to consider the kind of economic patriotism that is good for the country and good for the businesses and workers located here.”
Conservatives argue that the nation's high taxes on business push them overseas.
At 39.1 percent, the United States has the highest tax rate on business of any other developed country world. Most other developed countries have an average tax rate on businesses of 25 percent, according to Americans for Tax Reform, a conservative group.
Each of America’s major trading partners – Canada, Mexico, Japan, the United Kingdom, Germany, and France – have lower corporate tax rates, according to ATR.
Earnest also said Obama wants to close “unfair loopholes”
“We've also noted that you could use some of that revenue that only benefits the wealthy and well-connected businesses in this country and invest it in the kinds of projects that benefit everybody, particularly modernizing our infrastructure,” he said. “That's why the president is calling on Congress to act on corporate tax reform.”
Another reporter followed up by asking why it's fair to accuse the companies of being unpatriotic when they are taking legal deductions.
“What it means is that business that continues to be located in the United States that continues to to benefit from the infrastructure of the United States, that continues to benefit from the national security of the United States, that continues to benefit from the supply of workers from the United States, well educated, highly motivated workers in the United States, they benefit from all those things without paying their fair share in taxes,” Earnest said. “The president believes that not only is not fair, it's not good for the American economy. It erodes the tax base.”
Treasury Secretary Jack Lew last month that he didn't think the president had the authority to act unilaterally, the New York Times reported.
The talk of unilateral action comes as the Republican-controlled House is suing Obama for overreach on executive actions, primarily as it pertains to Obamacare.