In an interview on CNBC, Obama claimed that he favored corporate tax reform in order to make the U.S. more competitive with other countries and prevent the so-called "corporate inversions," in which an American company merges with a business in a low-tax countries and then bases the parent company there.
But Congress hasn't responded, the president said.
He said that he would pursue reform, but warned the process could be lengthy, citing the year and a half it took President Reagan to push through a major tax reform in the 1980s. "Now is the time to get started," he said, promising that his administration would be "foursquare behind it, as long as the goal of reform is to simplify the system, and make it fair," rather than simply cutting rates. The U.S. has the highest corporate tax rates among industrialized countries.
Obama criticized companies that seek inversions, telling them that "you are not doing right by your country."
"Companies thrive in the U.S. in part because they benefit from the best university system in the world, the best infrastructure," said Obama. "For you to benefit from that entire architecture that lets you thrive but move your technical address,” he claimed, "is neither fair nor good for the economy in the long term.”
"If you simply acquire a small company in Ireland” or a similar low-tax country, Obama said, “and start saying, 'we're now magically an Irish company' despite the fact that you may only have 100 employees there and you've got 10,000 employees in the U.S., you're just gaming the system. You are an American company."
During his interview with CNBC's Steve Liesman, Obama also touched on the topic of income tax reform. He indicated that his administration's priority was limiting tax preferences that favor the wealthy rather than raising rates, having already succeeded in raising the top income tax rate to 39.6 percent. He nevertheless suggested that he was open to raising the top rate further.
"I don't have a particular number in mind, but if you look at our history, we are still well below what the marginal tax rates were under Dwight Eisenhower, all the way up through Ronald Reagan."