Obama links corporate tax reforms to jobs

President Barack Obama criticised a flawed US tax code saying that it allowed corporations with "fancy accountants" to hide their money overseas, paying little or no taxes.

In the latest in a series of economic speeches, Mr Obama offered a deal to Republicans to overhaul the tax system that would lower rates for companies if Congress in turn agreed to spend more on investments that would create middle-class jobs.

Speaking at a warehouse in Chattanooga, Tennessee, operated by online retailer Amazon, the president again urged Congress to consider compromise to end two years of deadlock on Capitol Hill over the country's financial position.

The president proposed “a grand bargain for middle-class jobs” in his latest economic speech ahead of a budget deadline in the autumn and another showdown with Republicans on government funding and the borrowing limit.

“Our tax code is so riddled with loopholes and special interest tax breaks that a lot of companies who are doing the right thing and investing in America pay 35 percent in their taxes,” he said.

“Corporations who have got fancy accountants and stash their money overseas, they pay little or nothing in taxes. That’s not fair, and it’s not good for the economy here.”

Mr Obama wants to use the lower corporate taxes and money saved from closing tax loopholes for companies to be reinvested in creating more manufacturing jobs for middle-class workers.

“Here’s the bottom line: I’m willing to work with Republicans on reforming our corporate tax code, as long as we use the money from transitioning to a simpler tax system for significant investment in creating middle-class jobs,” he said.

Republicans dismissed the proposals, saying they were old ideas repackaged.

"It's just a further-left version of a widely panned plan he already proposed two year ago," said the Senate's minority leader, Mitch McConnell, a Republican from Kentucky.

'Corporate tax'
Mr Obama wants to reduce the US corporate tax rate, which at 35 per cent is one of the highest in the world, and impose a minimum tax on foreign earnings as part of his plans to change the tax system.

In May, Apple's use of Irish companies to pay minimal tax on tens of billions of dollars of overseas income was sharply criticised at a Senate hearing at which Ireland was labelled a "tax haven".