Barack Obama has addressed the international scandal caused by the Panama Papers, around 11 million documents which have exposed massive tax avoidance by former and current heads of state.
Speaking to reporters, the President revealed that the US Treasury and Internal Revenue Service have stepped up their efforts to limit “corporate inversions” - whereby large companies locate their headquarters abroad to save tax, a common measure among Fortune 500 companies.
“Another reminder is in the big dump of data coming out of Panama, that tax avoidance is a big global problem,” he said.
No leader in the US was mentioned in the Panama expose, but Mr Obama admitted that many wealthy Americans and companies benefit from the same loopholes.
“Frankly, folks in America are taking advantage of the same stuff," he said.
The Panama leak, which led to the resignation of Iceland’s Prime Minister, shows that elected officials, dictators and their associates around the world have used offshore trusts and established other offshore companies in order to pay less tax.
“A lot of it is legal. But that’s part of the problem,” said Mr Obama.
“These corporations have enough lawyers and enough accountants to wiggle out of rules that normal citizens abide by,” he added.
Mr Obama accused large companies of “gaming” the system and “taking advantage”, which results in potentially trillions of dollars worldwide being diverted from important causes.
“A lot of the loopholes come at the expense of middle class families as that lost revenue has to be made up somewhere,” he explained, adding the US consequentially cannot invest “as much as they should” in schools, roads, bridges, infrastructure and “creating opportunities for children”.
“This is all net outflows of money that could be spent on pressing needs here in the US,” he added.
He said legal tax avoidance loopholes can only be fully closed by Congress, which is controlled by Republicans.
“Unless the US leads by example in closing some of these loopholes and provisions then in many cases you can trace what's taking place but you can’t stop it,” said Mr Obama. “There will always be some illicit moving of funds around but the world but we shouldn't make it easy."
Josh Earnest, the President's Press Secretary, added that "too many Republicans are looking out for their wealthy donors”.
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