WASHINGTON, April 5, (Agencies): US President Barack Obama said Tuesday that the revelations that powerful international politicians and businessmen have hidden money in shell companies shows tax avoidance is a global issue. He said wealthy individuals and corporations are “gaming they system” by making use of tax code loopholes that average taxpayers do not have access to. He also said that US companies merging with foreign firms just to cut their tax liabilities are not “paying their fair share” for benefitting from the US economy.
“Tax avoidance is a big global problem,” Obama said, days after documents leaked from a Panama law fi rm showed tens of thousands of anonymous companies could have been used to hide income. “It’s not unique to other countries, because there are people in America who are taking advantage of the same stuff.” “A lot of it is legal. That’s the problem.” Obama spoke a day after the US Treasury tightened rules against tax “inversion” deals, in which US companies merge with foreign firms to move their official address offshore — but not their US operations — to avoid paying US taxes. Such moves — like a pending $160 billion tie-up between pharmaceutical giants Pfi zer and Allergan — exploit loopholes that allow the companies to “get out of paying their fair share of taxes home,” Obama said.
“They renounce their citizenship and declare they are based somewhere else. They get all the rewards of being an American company without filling the responsibilities to pay their taxes the way everybody else is supposed to pay them,” he said. “It sticks the rest of us with the tab. It makes hard-working Americans feel like the deck is stacked against them.” The president called for Congress to take action on tax code reforms to eliminate loopholes that allow such blatant avoidance. Iceland’s embattled prime minister has resigned amid a controversy over his offshore holdings, a Cabinet minister said Tuesday as outrage over the accounts roiled the North Atlantic island nation.