GO
Loading...

Obama likely won't get tax reform done: Economist

President Barack Obama may want to close the loophole that allows companies to avoid federal taxes in "inversion" deals, but he doesn't really have much of a chance of getting any tax reform done, economist Joe LaVorgna said on CNBC Thursday.

Inversions, when U.S. corporations merge with a foreign company and therefore move their tax domiciles overseas, are becoming more common. If they continue, the U.S. will lose an estimated $19.5 billion over the next 10 years, according to Democrats on the House Ways and Means Committee.

Read MoreObama presses to close tax loophole 'inversions'

"This obviously is a very divided government. The probability that the Republicans pick up the Senate in November has been rising. That would arguably make it even more divided and would likely push off any type of comprehensive tax reform until the next presidential election in '16," said LaVorgna, chief U.S. economist for Deutsche Bank.

President Obama speaks in the Brady Press Briefing Room of the White House in Washington, D.C.
Getty Images
President Obama speaks in the Brady Press Briefing Room of the White House in Washington, D.C.

The current corporate tax rate in the U.S. is 35 percent. Many CEOs have complained that's too high and said the tax code needs to be overhauled.

Read MoreCEOs to Obama: Tax reform, not an inversion Band-Aid

Nine inversion deals already have been agreed to this year and more are under consideration. Since 1983, an estimated 76 companies have left the U.S. for lower-tax countries.

"Everybody can seem to agree that we need broad bipartisan tax reform. We have some blueprint for that," LaVorgna said in an interview with "Power Lunch."

"The problem is the Democrats have wanted to raise revenue. The Republicans haven't wanted to. It seems to be there is room for some agreement here, but the politics won't allow it to occur."

—By CNBC's Michelle Fox, with reporting by CNBC's Meg Tirrell.