Obama and Mark Cuban take up push to stop inversions

If corporate tax inversions weren’t an issue prior to yesterday, they definitively exploded into the open over the past 24 hours. The President devoted a large chunk of a speech in Los Angeles to the issue on Thursday. “I want everybody to pay attention to this,” Obama counseled, explaining how corporations shift their corporate billing address overseas to evade taxes, while keeping their physical headquarters stateside. “They don’t want to give up the best universities and all the advantages of operating in the United States, they just don’t want to pay for it,” Obama said. And he used the language of “economic patriotism” and “corporate deserters” that has become increasingly typical for Democrats.

The setting for this roundhouse blow was unmistakable — not a briefing room, or in a meeting with Congressional leaders, but a stump speech. This is not what you do when you want to step gingerly as negotiations over the policy change gradually advance. This is what you do when you want to plant a flag on an issue that everyone will hear about for the next few months in campaign ads.

This will polarize and prolong the issue. Democrats have been running on “ending tax breaks for companies that ship jobs overseas” since the John Kerry campaign in 2004, but they only advanced such a bill in the Senate this week. Issues that spontaneously pop up in campaigns are often the least likely to actually get solved. But they play well to the public, and they can be employed to show contrast between the parties. So they rocket to the top of the conversation.

This will likely delay any resolution on inversions until after the midterm elections. But of course, that was the plan, anyway. Liberals — on Capitol Hill (like Rep. Keith Ellison, D-Mich.) and off (like Americans for Tax Fairness) — who actually want a change in policy hope to hold up the expected passage of corporate tax breaks called “tax extenders” as leverage in the lame duck session, refusing to advance the business-friendly breaks without some language halting inversions or making them less attractive.

House Republicans have countered with talk of more sweeping tax changes. But with the president now publicly stating anti-inversion legislation should be taken up outside of broader corporate tax reform, congressional Democrats’ resolve could stiffen.

Key to the move, however, is whether Democrats can make the bill retroactive, so that a rush of last minute, under-the-wire inversions doesn’t ensue.

Meanwhile, Dallas Mavericks owner and millionaire investor Mark Cuban, in a series of tweets, said he would sell the stock of any company that engaged in an inversion to avoid taxes, and encouraged others to do the same. “When companies move offshore to save on taxes, you and I make up the tax shortfall elsewhere… sell those stocks and they won't move,” Cuban wrote. While Cuban’s perspective doesn’t precisely mirror that of every investor, if he can sway a few others in this direction, pressure will build on Congress to act.

Either way, prepare to hear a lot more about inversions for the next few months.