President Barack Obama on Thursday pounded U.S. corporations that move their headquarters overseas to cut their federal taxes and pushed Congress to draft a new law to shut the loophole Congress wrote, as the U.S. corporate tax rate sits at the top of the global ranks.

Before a crowd of backers at the Los Angeles Technical College, the president cited "economic patriotism" and indicated companies that use the loophole to lower their tax bills were unpatriotic. The president has been in California on a fund-raising tour for Democrats.

"Even as corporate profits are higher than ever, there's a small but growing group of big corporations that are fleeing the country to get out of paying taxes," the president said. "They're technically renouncing their U.S. citizenship, they're declaring their base someplace else even though most of their operations are here. You know some people are calling these companies 'corporate deserters.'"

To date, money doesn’t need a passport, but now anything goes with this administration and Congress.

Key Democrats have offered bills to rein in what are called corporate inversions by increasing foreign ownership to 50% or more, up from 20%, if a company chooses this route and keeps management control in the U.S. The measure was in the president’s budget submitted in early spring. Critics charge the bill would effectively turn U.S. companies into foreign concerns since overseas owners would press their majority ownership under this new regime.

Democrats also want to backdate the law to May 2014, effectively undoing several mergers, including Medtronic’s $42.9 billion acquisition of Covidien, based in Ireland, or AbbVie’s merger with Great Britain’s Shire for $54 billion. Wall Street odds put the chance for a new law at one in 10, but the issue is getting a lot of play as the mid-term elections approach.

The U.S. corporate tax rate is the highest in the world, according to the OECD, as U.S. companies face double, even triple their rivals’ rates in Europe and Asia. The U.S. rate is higher than France, Canada, Slovenia, or the Slovak Republic. The Government Accountability Office notes the effective federal rate is 17% after corporations fight to protect their bottom lines, and their workforces, however, with state and local all-in, the rate shoots to 50% or more for many U.S. companies.

Unlike most countries, under the U.S. system for corporate taxation, U.S. companies face a double whammy. All income of domestically-headquartered companies is subject to U.S. tax, including income earned abroad. Generally speaking, businesses can take a “foreign tax credit” for taxes that their foreign units pay to other countries to mitigate double taxation. 

Since 1983, 76 companies have shifted their corporate domiciles away from the U.S, 47 in the last decade alone, says the Congressional Research Service.  

Both Standard & Poor’s and Goldman Sachs note that many U.S. companies, especially in the drug, biotech, and medical-device sectors, get half or more of their sales outside the U.S., so companies often move to be near these markets.

The Congressional Research has tossed cold water on other types of corporate tax reform. It has said that while cutting the corporate rate lower “would reduce the incentives to invert, it would be difficult to reduce the rate to the level needed to stop inversions, especially given revenue concerns,” meaning, it fears less tax revenue from lower rates, despite the fact Great Britain cut its rate and is seeing a boom in companies moving there (the U.K. is fast becoming a tax haven).

The Congressional Research also has criticized the territorial tax system. Under the territorial tax, a country pulls in taxes only on income earned within its borders, meaning, a territorial system taxes businesses on only income earned within a foreign country’s borders, doing away with the double whammy.

But the Congressional Research Service fears this too. It said: “There are concerns that a territorial tax could worsen the profit-shifting that already exists among multinational firms.” In other words, it is concerned this system would hasten corporate flight out of the country. This, despite the fact the latest fix of 50% or more foreign ownership would push U.S. companies into the arms of owners overseas.

S&P Capital IQ has provided an estimate on just what would happen to the U.S. economy if the effective corporate tax rate paid by S&P 500 companies dropped to Switzerland’s average, effective rate of 22.4%.

S&P Capital IQ said that slashing the corporate tax rate could create 10 million jobs or more over a five-year period as companies bring cash back home.

It says that would also improve the historically poor 62.8% labor participation rate, a level last seen in the recession era of 1978, back up to the 67% level the U.S. had before the financial crash which was the same rate in the mid-to-late 1990s. During those periods, GDP growth averaged over 4% per year, more than double the rate it's been over the last 12 months.

However, why are companies parking cash overseas, is it just because of high taxes? S&P has already indicated high debt is an issue, as companies borrow cheaply to buy back stock in record amounts, boosting their earnings per share results. Companies spent $598.1 billion on stock buybacks last year, according to Birinyi Associates in Westport, Conn. That was the second highest annual total in history, behind only 2007.

The world’s top 2,000 biggest spending companies last year booked $4.5 trillion of gross cash, says S&P, but that’s against a whopping $11.1 trillion in net debt. The companies’ net debt to total assets at 24 percent has ballooned to the same levels last seen in 2007, S&P says. Companies need to park cash in low-tax countries to service that debt mountain.

Here’s a short list of some companies that have pulled U.S. stakes to move overseas. Walgreens (WAG) says it is going to announce its intention about moving overseas in coming weeks, which is still up for discussion. 

Moving Overseas And drawing D.C.’s ire:

  • AbbVie/Shire (Ireland)
  • Medtronic/Covidien (Ireland)
  • Mylan Labs/Abbott Labs (Netherlands)
  • Chiquita Brands/Fyffe (Ireland)
  • Applied Materials/Tokyo Electron (Netherlands)
  • Actavis/Warner Chilcott (Ireland)

Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007 and is the author of Skirting Heresy: The Life and Times of Margery Kempe (Franciscan Media, June 2014).
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.