Overnight Finance: Obama takes on offshore tax deals

OBAMA CALLS FOR ACTION ON CORPORATE TAX LOOPHOLES: President Obama on Tuesday called for the Republican-controlled Congress to close corporate tax loopholes such as those that allow U.S. companies to reincorporate overseas to lower their taxes.

{mosads}A good way to close the loopholes would be through business tax reform, but so far Republicans haven’t taken action, the president said during a White House press briefing.

“My hope is they start getting serious about it,” Obama said.

The president’s comments come the day after the Treasury Department announced new actions designed to limit corporate inversions. Inversions are transactions in which a U.S. company merges with a foreign company and reincorporates the combined company overseas to lower its tax burden. This practice has frequently been criticized by lawmakers and presidential candidates: http://bit.ly/1MQQA5v.

CLINTON, SANDERS PRAISE TREASURY ACTION: The Democratic presidential candidates are backing the Obama administration’s latest actions aimed at deterring companies from moving their headquarters overseas to lower their taxes.  

“The Treasury’s new rules have put profitable corporations on notice that their greed will not be allowed to continue,” Bernie Sanders said in a statement Tuesday released through his Senate office.

Sanders said “the rules appear to eliminate the $35 billion in tax breaks that the pharmaceutical giant Pfizer would have received from its planned offshore merger.” He also called on Congress to pass legislation that would stop inversions altogether.

Clinton spokesman Ian Sams said that the former Secretary of State backs Treasury’s measures on inversions.

“Yesterday’s action by the Treasury Department to further restrict this egregious behavior is a strong step forward, which she supports,” he said: http://bit.ly/1WarlNF.

GOP TAX CHIEF SLAMS MOVE: The top Republican tax writers in the House and Senate are unhappy with the Treasury Department’s latest actions aimed at deterring companies from moving their legal residences overseas to lower their taxes.

“Instead of unveiling commonsense policies to help American employers compete globally and create new jobs for our workers, the Obama Administration just announced punitive regulations that will make it even harder for American companies to compete and will further discourage businesses from locating and investing in the United States,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said in a statement late Monday: http://bit.ly/1MbLj8G.

PFIZER MIGHT DROP ALLERGAN MERGER: Drug giant Pfizer may pull out a $160 billion merger with Allergan after the Obama administration’s renewed crackdown on tax-evading deals, according to Reuters.

The two companies are in talks on Tuesday about abandoning, not altering, the deal, the news service reported.

The Treasury Department late Monday imposed strict new rules on corporate inversions that are seen by some as specifically targeting the Pfizer-Allergan deal. Allergan’s shares dropped by 22 percent in after-hours trading following the Treasury Department’s announcement. The Hill’s Sarah Ferris has more: http://bit.ly/239bDI3.

BUDGET HAWKS BASH ‘RIDICULOUS’ TRUMP DEBT PLAN: Leading budget hawks are soundly rejecting Republican presidential candidate Donald Trump’s claim that he can eliminate more than $19 trillion of national debt in eight years.

“That’s ridiculous,” former Indiana Gov. Mitch Daniels, who served as the top budget adviser to President George W. Bush, said during a panel hosted by the Committee for a Responsible Federal Budget.

Daniels’s comments were seconded by the founding director of the Congressional Budget Office, Alice Rivlin.

“I’ll tell you a secret: He can’t do it,” said Rivlin, who also led the White House Office of Management and Budget under President Bill Clinton: http://bit.ly/1S966pm.

HAPPY TUESDAY and welcome to Overnight Finance, where we’re embracing baseball’s sweet return. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

Tonight’s highlights include major Panama Papers fallout, a heated CFPB hearing and sanctions against the surviving Paris attacker.

See something I missed? Let me know at slane@digital-staging.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://www.digital-staging.thehill.com/signup/48.

ICELAND PRIME MINISTER RESIGNS AFTER PANAMA PAPERS: Iceland’s prime minister has reportedly resigned following accusations in the “Panama Papers” that he attempted to hide millions of dollars in an offshore company.

The BBC reported Tuesday that Sigmundur Gunnlaugsson plans to step down from his position at the top of Iceland’s government, making him the first public official to resign following a wide-ranging report that accuses a host of public figures of hiding millions of dollars in offshore accounts.

Thousands of protesters amassed outside Iceland’s Parliament to demand Gunnlaugsson’s resignation following the report, which found he set up a company in 2007 on the British Virgin Islands and sold his half of the company to his wife for $1 before he would have had to publicly disclose it: http://bit.ly/23eBoTX.

OBAMA: PANAMA PAPERS SHINE LIGHT ON ‘BIG GLOBAL PROBLEM’: President Obama addressed the massive Panama Papers leak on Tuesday, saying the documents showed that “tax avoidance is a big global problem.”

“A lot of it’s legal, but that’s exactly the problem,” he said in remarks at the White House where he pushed Congress to enact corporate tax reform.

The Panama Papers are documents from a Panama-based law firm that set up offshore shell companies. More than 100 news outlets examined the documents, finding information about the financial holdings of 140 politicians and public figures around the world: http://bit.ly/22as29m.

SENATORS LOB INSULTS AT CFPB HEARING: A Senate Banking Committee hearing on the effects of financial regulation Tuesday spiraled into a heated showdown between senators over the tone and content of the debate.

The hearing focused on the Consumer Financial Protection Bureau’s (CFPB) impact on banking and lending two days before the agency’s director, Richard Cordray, is set to testify before the Banking Committee.

While Republicans claimed the CFPB’s overzealous regulation and haphazard enforcement was starving off small institutions and slowing lending, Democrats countered that the economy was stronger under the agency’s watch and that evidence doesn’t back up Republican claims.

“I don’t even know where to start,” said Sen. Sherrod Brown (D-Ohio), the committee’s ranking Democrat. “I’ve been on this committee for almost 10 years and I’ve never heard such unsubstantiated claims.”

THE MOST AWKWARD MOMENT: Elizabeth Warren saying a witness she once hired “might have one of the worst track records in history on this issue.” http://bit.ly/1q4ykeq.

SANDERS: WALL STREET ‘DESTROYING MORAL FABRIC’ OF U.S.: Bernie Sanders says Wall Street has said “the hell with the rest of the people in this country” in its hunt for profits.

The Democratic presidential candidate on Monday told the New York Daily News that big banks and giant corporations like General Electric are “destroying the moral fabric of this country.”

“What corporate America has shown us in the last number of years, what Wall Street has shown us, the only thing that matters is their profits and their money,” he told the newspaper’s editorial board. “And the hell with the rest of the people of this country.” http://bit.ly/1YdZmLw.

PARIS ATTACKER HIT WITH SANCTIONS: The Obama administration on Tuesday designated the sole surviving suspect of last November’s deadly terror attacks in Paris as a “global terrorist,” imposing sanctions to freeze any of his assets in U.S. jurisdiction and forbid Americans to do business with him.

The 26-year-old suspect, Salah Abdeslam, was arrested in Belgium nearly three weeks ago, days before a series of blasts ripped through Brussels’s airport and a metro station, killing 32 people.

According to the State Department’s Tuesday morning designation, he is “an operative” of the Islamic State in Iraq and Syria (ISIS) and had an integral role in the November Paris attacks: http://bit.ly/1VuDTyR.

NIGHTCAP: How do you build a pizza empire in Wisconsin? Put mac and cheese on the pies, duh.

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