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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."
America should be punished for having such a ridiculous tax code and a confiscatory corporate tax rate. I'd also move my operation to Ireland if I could.
How about we just lower our tax rate to 15%? We would then be a favorable place to have business and while not cashing in on $0 at the higher rate we would at least cash in on some taxes.
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.
Hardly a small company in Ireland... Maybe smaller than Pfizer, but not by much.
if you believe all income belongs first to the state. All this is legal, and the whining that inevitably goes on after such transactions reflects the belief that the "fair share" of a corporation's income is less than whatever the speaker wants it to be.
When what's legal and what's sustainable for the society are not aligned, there are likely one of two results: 1) Law is changed to be more sustainable or 2) the society suffers.
But hey, more power to those who can screw over everyone else for their tax free money!
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until our politicians wake up and realize all costs are pushed onto the consumer anyway nothing will change
its not a "loophole" its the law, and until the law is favorable to business, business will continue to move to places that are business friendly. We see it on a microscale in the USA as it is, look at all the companies who are based in delaware.
Delaware is only for corporate law adjudication. Taxes are still collected for revenue or operations in other states (i.e., if you have a footprint or customers there, you still pay).
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The solution has already been implemented for the individual, and should be evenly applied to corposrations, after all they make use of the infracstructure that has been largely funded by public dollars such as highways, laws--especially Intellectual Property laws, Law enforcement, military and security to pretect your assets and investments, communications infrastructure, etc.
As an individual if you accrue income overseas, you are still responsible for filing US taxes, even if you are not a US resident at the time the income was accrued. There is a credit granted to you for the amount of taxes payed elsewhere, however if the foreign taxes are less than the US taxes, you still pay.
Corporations should be liable for the same debt. That way, if they wish to take advantage of all of the public infrastructure present in the USA, then they are responsible for paying their fair share of taxes.
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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They were just fleeing an oppressive government in search of a better life!
It seems like if we had any sense at all, we'd immediately dump the corporate income tax and replace it with a revenue-neutral increase in the capital gains and dividend taxes. The corporate shareholders ultimately end up paying any dollars that get paid anyway, and humans are much easier to tax than corporations are. A corporation is a shape-shifting non-entity that can "spend a year dead for tax purposes," so trying to change the laws fast enough to get any revenue out of them is a losing battle. All we end up doing is giving them an incentive to do ridiculous things like hold money in foreign accounts and set up subsidiaries all over the world to move revenue around. It's great for the tax lawyers and financial consultants, but it doesn't really get us any real revenue. It's the tax enforcement equivalent of the drug war.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
When what's legal and what's sustainable for the society are not aligned, there are likely one of two results: 1) Law is changed to be more sustainable or 2) the society suffers.
But hey, more power to those who can screw over everyone else for their tax free money!
If what the company is doing is not sustainable, the company will fail, as it should. If what society is doing is unsustainable, it will fail, as it should. It's called capitalism and if you leave it alone, you'd be surprised at how good it works.
What would you propose? We block companies from doing these kinds of inversions? They'd just transfer their entire operation overseas and then the US would see zero percent of that income. There are any number of other countries that would LOVE to have them, as is evidenced by their lower tax rates and success in luring said companies.
The stupidity is the assumption you can somehow control these companies, or punish them for their actions. Controlling them is impossible so long as there are other places to do business. Punishing them does nothing but punish those who consume their products or services. Putting them out of business adds to unemployment. Banning their products or services from the US market would damage consumers *and* employees. You know...employees...those people who work hard every day to take home a paycheck to their families. Not everyone at a corporation is Scrooge McDuck burning hundred dollar bills to warm their gold-plated mansion.
No, the answer is to lower our corporate tax burdens and win this business back to US shores and the US tax system. It doesn't take a genius to realize that 15% of something is better than 26% of nothing.
In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us. - Fyodor Dostoyevsky
I'd also move my operation to Ireland if I could.
What's stopping you?
The US tax code. The US keeps its hooks in its citizens and companies, for decades, if they try to leave, even if they move out and renounce their citizenship.
The US does this to a far greater extent than other countries who generally don't tax their citizens if they're out of the country for more than half a year. (This is where "The Jet Set" came from: Citizens of various non-US countries who had found a way to earn a living that let them split their time among three or more countries every year and avoid enough income tax to live high-on-the-hog, even on an income that otherwise might be middle-class.)
Only really big companies, with armies of lawyers, can find loopholes that let them effectively move out of the US to a lower-taxing alternative. You'll note that TFA is a lament about how one managed to escape, and how the US might "close THIS loophole" to prevent others from using it.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
How about we lower taxes to a reasonable level so that companies don't feel the need to do this?
This is pretty bold (not really the right word) of Pfizer to move overseas, considering that they, along with the rest of big Pharma are the ones who lobbied to make it illegal for Americans to import cheaper prescription drugs. Maybe Pfizer should be required to sell their drugs in the USA for the price they charge in Ireland.
15% Flat rate would level playing ground and make it equal for both individuals, corporations both large and small.
Reality is that Corporations dont like of competition, because middle class is paying upwards of 48% marginal tax (state plus federal plus medicaid/medicare etc).
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
That's the best sig I've seen in quite awhile.
Only really big companies, with armies of lawyers, can find loopholes that let them effectively move out of the US to a lower-taxing alternative. You'll note that TFA is a lament about how one managed to escape, and how the US might "close THIS loophole" to prevent others from using it.
Not really. A mid-sized company can do this with only a couple of lawyers, so long as they're good. Obviously it has to be big enough that it will save more in taxes than it costs in legal fees, costs, and goodwill.
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.
Gotta understand the decision-making process for politicians:
1) These companies are big donors.
2) 90% percent of the population has no idea about this, and fewer care.
3) Politicians get cash for looking the other way, and it has no impact on their electability.
I started following these kinds of shenanigans prior to the financial crisis. The blame is on the politicians - not for being self interested, but for actually undermining the society for cash and favors from big donors. The vast majority of the voting public doesn't understand this kind of inside baseball. And the incumbency rate hasn't really changed much as a result of these issues. So the boiling of the frog (this society) will continue until we become Brazil or we snap out of the torpor.
"A society cannot be both ignorant and free." -- Lady Gaga
We can fix this problem and get patent reform at the same time.
After 3 years, patents issued to foreign based or owned companies can't be enforced against US owned companies making products in the US that utilize them. Patents issued to American owned companies using the patent to make a product in the US can enforce them for the normal time against anyone.
This solves the problem with obnoxious multi-nationals hoarding patents by making them only useful for a very short time. It discourages US companies from "inverting" for tax purposes but largely remaining American corporations (and thus benefitting from taxpayer provided legal, diplomatic and protection but skipping out on the taxes). And it encourages businesses to make products in the US.
Of course companies with insanely good and hard to make products may choose not to sell them here because of this, but the upside is there'd be an incentive and means to make them here by other means and for the most part, willfully refusing to sell in the American marketplace is like throwing money away.
There's no reason that the patent system couldn't be used as a tool to encourage business in America and discourage evading paying for the very civil society that makes business work. Hopefully now Pfizer will be utilizing the vast resources, long reach and deep influence of the Irish government to enforce their patents, lobby governments when they don't get the treatment they want, when, say a new drug is copied in China or India or when the FDA doesn't approve it.
When TRUMP is elected, America will win so much, we will get tired of winning!
Actually, the opposite is true: it's the high tax welfare state that has come to an end in Ireland and that they suffered the consequences of. They have now come to their senses. The US will sooner or later have to follow suit.
when you have practical monopolies created when a small group of people own everything. Try to find something in your house you use day to day that isn't made by one of the Koch Brothers companies for instance. Played any of the Saints Row games? They own those (among others). You Toilet paper was probably made by them (there's a joke in there somewhere) and a lot of your food. Plus a tonne of your energy/oil.
Also for medical care you're not really free to make choices. For one thing without 6-10 years of study you don't really have enough information. For another thing if you have cancer and need chemo you're not exactly free to say no. This is a classic mistake folks make. You're comparing the decision making processes of buying a twinkie to the process of buying a heart transplant. While you might technically be 'buying' both, the processes are really nothing alike, and frankly you wouldn't want them to be.
Tax rates can be negative if the money comes somewhere else. Think of a retailer running scams. He doesn't scam his big clients because they will sue him or send thugs around to hurt him and his family. So he scams his little clients. Basically you and I pay our taxes so the big guys that own everything can own everything.
Now, I can already here you railing against taxes again so I'll say this: It's OK to pay taxes (render unto Caesar, yadda, yadda, yadda) , as long as you're getting something for it. What I hate about being an American is that I pay about the same a Europeans but without the free health care, social safety net and economic policies that raise my wages...
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I'm all for a reasonable tax on corporations, but not by offloading their tax burden onto the rest of us. I'm in the 25% bracket and make no where NEAR what a corporation does. Perhaps as an incentive, allow business to claim a tax deduction for money they put back into the business ? Might even get the big ISP types to upgrade their networks :|
yes, revise the U.S. tax code - like politicians will ever do that ...
a less knee jerk/punish big corporations perspective in the WSJ:
It ain't what they call you. It's what you answer to. http://mylyceum.us/
You can renounce citizenship, that solves the tax problem.
But for these corporations, they're not really leaving the US. They're just moving papers overseas. The CEOs are not uprooting their families and immigrating to somewhere else. It's only that the new parent company is in Ireland, a sleight of hand with the taxes.
We will win luxuriously. Atlantic Cities for everyone!
If you have over $2 million in total assets, the Federal Government will demand a slice of that before you can expatriate. Yes, those are accumulated assets that have already been taxed when first gained. Renouncing really doesn't solve the problem...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Citation? Because I don't think it works like that. I think that you get taxed on unrealized (and hence untaxed) gains, but you also get to deduct the first $600k. This also applies to green card holders who leave the USA.
The real "Libtards" are the Libertarians!
My Mom died of cancer because of smoking. Pfizer has nothing to help with that. I've got other family with naturally occurring cancers that can (and were) be cured by meds. Pfizer didn't make any of those. They were developed in Europe by their governments because there was no money to be made off them. Don't worry 'bout my Mom, it was years ago (she died young, Cigarettes do that to you) or my other family member who the European gov't saved.
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how easy it is to get out of taxes when you own the gov't. Right now they're putting a little effort in. As they get more and more power (because your giving it to them) they'll cut back and back.
Taxes are a powerful tool to drive certain types of behavior. They're often the only tool we have and the only real power the masses can exact on our corporate overlords. You don't leave a tool that powerful lying dormant. Well, you can, but you won't last long if you do...
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Well when the person only exists due to the State creating them and the person makes insane profits due to special laws the State passes for their benefit and then they make even more insane profits due to the treaties the State forces other countries to sign, perhaps the State should own all that income. Of course the company does have the option of not accepting the person-hood offer from the State along with all the perks and fall back to being a collection of natural people with the same tax structure as the average person and the same responsibilities as the average person including being liable for their decisions.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
1. The $2M sum is only a test for eligibility.
2. Tax is payable on unrealized gains, not total assets:
There is a $680k deduction, which is unrelated to any primary residence:
The real "Libtards" are the Libertarians!
You've provided reasonable links, but you simply haven't read that information correctly. Here's how the U.S. Expatriation Tax actually works (assuming your net worth exceeds $2 million or that you otherwise are subject to the Expatriation Tax), oversimplifying only slightly:
1. Take your total worldwide net worth at fair market value as if all your assets were sold the day before your expatriation date.
2. Subtract your total worldwide cost basis from your net worth. The result is your total gain from your mark-to-market "deemed sale."
3. Subtract $690,000 (tax year 2015, adjusted annually for inflation) from your total gain. The result is your total taxable gain. If your total taxable gain is zero or negative, stop: you do not owe any Expatriation Tax.
4. Otherwise, pay ordinary capital gains tax rates on your total taxable gain, with a current top marginal tax rate of 23.8% (if the NIIT applies, and I'm not sure it does, but let's assume that). This is your total U.S. Expatriation Tax.
If you owe Expatriation Tax your cost basis is reset. Any subsequent capital gains on U.S. assets will only be taxed based on your new, reset cost basis. Note that "wash sale" rules do not apply when making the Expatriation Tax calculation, so deemed sale capital losses are not limited within the calculation. To some degree you can pay your Expatriation Tax in installments if you wish and only pay statutory interest on deferred payments (currently 3%). If your assets are generating a higher after-tax rate of return (quite likely) then stretching out your Expatriation Tax payment to the maximum extent allowed by law is a good idea. You may also wish to stretch out your Expatriation Tax payments if you prefer to raise funds more slowly, perhaps as in the form of interest, dividends, royalties, and/or earned income.
The U.S. Expatriation Tax is not a hardship by any reasonable definition of hardship, and it's quite disingenuous to complain about not getting a $250,000 capital gains exclusion on a home when you're getting a $690,000 blanket exclusion. But if it were a hardship, there's a simple, 100% effective solution to avoid the U.S. Expatriation Tax: don't renounce or relinquish U.S. citizenship.
One further point. I'm implicitly assuming long-term capital gains tax rates, and that's a reasonable assumption when oversimplifying slightly. For the record, short-term holdings (assets held less than one year) can get taxed at ordinary income tax rates. The top marginal U.S. income tax rate is currently 43.4% inclusive of the Net Investment Income Tax (NIIT) if it applies. However, short-term holdings presumably haven't gained as much value as long-term holdings, especially in the aggregate, unless you've been particularly lucky. And there's a simple solution for that, too: wait until the short-term holdings become long-term holdings (held for one year), then expatriate.
;) You've got to be solidly within the top 5% on a wealth basis to get to an Expatriation Tax calculation, never mind actually owing any Expatriation Tax. And then, if you do pay some, you're resetting your cost basis anyway. You're just paying Uncle Sam what you would have paid when you sold the assets, less a blanket exemption. That's quite fair when checking out permanently, just as you must settle your hotel bill and minibar tab when you check out of a hotel.
These are not exactly middle class problems, are they?
Pfizer sells a patented product. The only thing stopping someone from making it for $1 instead of $1000 is that patent. The government's courts, police and armies defend Pfizer's business from being destroyed by generic knock offs. Fuck me if using the might and power of the US government to create and defend your business model doesn't deserve *something*.
Let's entertain your silly little sophomoric perspective. Let's say Pfizer owes nothing to the state. Great. The reciprocal principle then means that the state owes nothing then to Pfizer. Lipitor is now free for everybody! In order to avoid paying 2% more in taxes they've now given up $10B next year in revenue to avoid 2% of about $800m in profit which works out to $16m in taxes. Their $10B business model only costs about $120m in taxes total. That's a bargain.
No, "labor mobility" means that people like me move away from countries that have too many people like you in them.
when you have practical monopolies created when a small group of people own everything.
Now you're changing the topic, which was how consumers should be able to vote with their dollars if a retailer doesn't provide good value, and citizens are better off if they're free to move to a different jurisdiction that has a better tax-to-benefits ratio than their current jurisdiction. And a business should be free to do the same. (If a business is gouged by any entity, including its government, it's bad for the little guy, because businesses always pass those costs on to their customers.)
But a consumer can't vote with their dollars if the retailer has a monopoly. And a business can't relocate if its current jurisdiction effectively has a monopoly on where that business is permitted to operate (perhaps because someone is threatening to slap a 50% tariff on its products, and/or steal its patents, if said business relocates).
So you see, when discussing the relocation of Pfizer, it's particularly incorrect to talk of monopoly. There were 193 countries, competing with various levels of effort, to get Pfizer to operate there -- the furthest thing imaginable from a monopoly. Ireland won this round, and the U.S. lost. There is a valuable lesson to be learned there, for those willing to learn it.
made by one of the Koch Brothers
Sorry, I don't buy into the fearmongering of making the Koch brothers into bogeymen. I saw an interview of Charles Koch; quite a pleasant gentleman. But apparently lots of slashdotters do buy into that fearmongering, because you got another +5 post. That's scary.
You're comparing the decision making processes of buying a twinkie to the process of buying a heart transplant.
No, I really didn't do that. The scope of my post was strictly limited to how monopolies that gouge consumers are bad, and monopolies that gouge businesses -- to include a government that doesn't allow businesses to relocate -- are also bad.
That that is is that that that that is not is not.
Ireland was not allied to Germany during WWI and WW2
news at 11.
These days 2 million is a few houses in the burbs... It's more than I have but not the princely sum it once was...
The majority of discoveries leading to drugs sold by Pfizer were made in American labs, by Pfizer scientists. The acquisition history is varied and contains Irish, German and Canadian companies, but that's, all in all, a small portion.
It takes worry, planning, and very personal care to achieve a $2 million net worth in the first place. After so much work and dedication, you do not want to see this money disappear and potentially hurt your charitable, retirement and family trust fund plans.
You should look up retirement costs. It's really expensive to live from age 60 to 90-100. You should start saving ASAP.
Parent should not be modded insightful, since the "information" given in the post is largely false.
The real "Libtards" are the Libertarians!
The U.S. Expatriation Tax is not a hardship by any reasonable definition of hardship...
It's not a question of "hardship". Stealing from people is wrong. Even when the victim has some money left over afterward.
Moo?
Moo!
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
All I see here is MOO! MOO! moo! MOOOOOO!
Can you type something not consisting of just Moos?
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
Good for you sparky. Now, what does this have to do with Pfizer or the thread about American made goods?
Are you trying to claim that your software is superior because it is American made?
And because Steven Burn looked at the code? Unfortunately, he is in the UK, so that doesn't count.
P.S.=> Eat your words, scumbag:
No thank you, I already answered those questions, and proved you wrong, but keep beating that drum, I am sure someday you might win an argument.
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
APK, if anyone is stupid, you are. You believe that posting agreeing with yourself is somehow going to affirm your position. You still have yet to actually say anything that disagrees with my assertions, you only win the argument going on in your own head.
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
Thank you for providing an example. The same arguments I already answered yet again.
APK likes to ask for responses to the same things over and over. Maybe he just likes the responses?
No! No! No! Pfizer just wanted to be based in the country that ranked #1 on the Good Country list! Which just happens to be Ireland, If you were Pfizer wouldn't you? http://www.goodcountry.org/
great to see jobs being created in Ãire :)
The U.S. Expatriation Tax is not a hardship by any reasonable definition of hardship...
It's not a question of "hardship". Stealing from people is wrong. Even when the victim has some money left over afterward.
Only tax cowards think the government is simply stealing from you. All your wealth you created in the USA was done because the USA has roads, public infrastructure and police, hospitals, and the *rule of law* to prevent others from stealing your wealth, or just stabbing you in your sleep for their own pleasure.
In short, your wealth was not created in a vacuum and it costs money to keep this infrastructure in place. You may bicker with the details or even a major part of how that tax is collected and spent (I sure do), but to claim it's stealing is to show ignorance of why it exists.
Or do you really think you'd have been better of born in Sierra Leone where there aren't such pesky taxes?
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Tax Corporate Revenues, Not Profits;
http://news.yahoo.com/warren-b...
Casteism
Nurse! He's off his meds! Security!
Hmmm... now, I wonder if this is the fault of Pfizer or the fault of onerous taxation?