Taking aim at "inversion" deals, Lew said Congress needs to amend tax laws to eliminate takeovers of foreign companies by US firms with the primary aim of seeking an address in a cheaper tax jurisdiction.
Lew said companies had touted up to USD 1 billion in annual tax savings by moving their address offshore, which could impact the annual budget, USD 3.8 trillion in the current year.
"By allowing these transactions to continue, we run the risk of eroding our corporate tax base and undoing the progress we have made to reduce our budget deficits," he said in an opinion piece in the Washington Post.
Companies launching inversion takeovers have advertised the tax benefits of giving the target firm 20 percent of the parent, allowing the parent to relocate its head office from the United States to a low-tax haven offshore.
Lew said new legislation should require that the foreign company own at least 50 percent of the US company to allow it to establish a foreign address.
"I don't care if it's legal -- it's wrong," Obama said.
Lew's call came as the latest such proposed deal became news. According to media reports, US drugmaker Hospira is in talks to buy the medical nutrition unit of France's Danone in a deal that would allow it to establish its tax headquarters outside the United States.
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