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With $160 Billion Merger, Pfizer Moves To Ireland and Dodges Taxes (arstechnica.com)
ourlovecanlastforeve writes: In a $160 billion dollar acquisition, drug company Allergan, a small company based in Ireland, "purchased" Pfizer, allowing the drug producing giant to move to Ireland and lower its tax rate from about 25 percent to 17-18 percent. Ars reports: "Such inversions, which are said to cost the American government billions in lost tax revenue, have drawn scorn from the Obama Administration and the Treasury Department. Last year, President Obama referred to the deals as 'unpatriotic' loopholes and proposed to close them. And last week, the Treasury announced new rules to make such deals more difficult. But Pfizer’s reverse-inversion skirts the rules, in part by keeping ownership split somewhat evenly between the two companies. After the deal is complete, current shareholders of Allergan, which has the majority of its operations in the US, will own 44 percent of the mega company. The remaining 56 percent will be owned by current Pfizer shareholders."
Forbid Medicare and Medicaid payments to companies that choose to move headquarters for the purpose of avoiding US tax. Maybe that will cause them to change their mind.
when Ireland drops theirs to to 10%? I guess we could do 5%. Then they'd do 2 and a half, then we'll do 1 and they'll do -5% (e.g. incentives) and we can top that with -10%....
See, this is what's called a "Race to the Bottom". The correct response is to tell Phizer: Thanks, and by. Then you slap a 50% tarriff on their drugs and enforce strict price controls. If that doesn't work you take their patents from them. If they stop "innovating" then fine. We hire folks to innovate in their place and tell them to go pound sand. What you do _not_ do is let them control negotiations and play their game. You will lose sir.
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Forbid Medicare and Medicaid payments to companies that choose to move headquarters for the purpose of avoiding US tax. Maybe that will cause them to change their mind.
You're thinking too small and you're risking a lot of lives. Don't forbid the payments; threaten the underlying patents.
The only way to fix this problem is by taxing the products when they enter the country.
Except we have treaties that forbid us from doing that. If we violate trade agreements, other countries will retaliate, and the world economy will spiral downward. For an example of this scenario actually happening, Google for "The Great Depression".
It's ridiculous to allow corporations to hide billions overseas.
It is ridiculous for America to tax profits on a product made in England and sold in France. It is ridiculous to have absurd tax laws that encourage companies to move jobs overseas. We should tax domestic sales, or domestic revenue, or domestic payrolls, or even domestic profits. But instead we tax worldwide profits, of only companies domiciled in America, giving them a huge incentive to go elsewhere. No other country has a tax like that. It is economic self-sabotage.