Walgreens is acquiring Alliance Boots, Europe's biggest pharmacy chain, but it won't move its corporate headquarters overseas for a tax inversion as many large corporations recently have.
"The company concluded it was not in the best long-term interest of our shareholders to attempt to re-domicile outside the U.S.," Walgreen Co.'s CEO Greg Wasson said in a statement this week,
according to Reuters.
So-called corporate inversions have become a hot-button issue as more and more U.S. corporations have acquired or merged with smaller companies overseas in order to move their tax base. U.S. corporations face some of the highest tax rates in the world, including rates of 35 percent on profits earned abroad, and many complain of double taxation by the U.S. and the foreign companies in which they operate.
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The New York Times reported that AbbVie and Mylan have recently announced such moves, and pharmaceutical giant Pfizer tried to buy AstraZeneca with hopes of carrying out its own inversion.
Lawmakers in Washington, including President Obama, said such practices are wrong, and are trying to devise ways to discourage the practice. Sen. Richard Durbin of Illinois, for example, personally discouraged Walgreen from moving out of its home state.
Beyond public pressure, subsidies may be one carrot the government can deploy to keep companies stateside, and Wasson implied as much in his statement, mentioning that "a major portion of its revenues [are] derived from government-funded reimbursement programs."
On the other hand, Jonathan Alter of
The Daily Beast pointed out that "Mylan and Medtronics, for instance, are deserting even as they receive hundreds of millions of dollars in taxpayer money through Medicare and Medicaid." That means companies with fewer or no incentives to stay are all the more likely to move their tax base.
Alter argued this week that U.S. companies should be made to sign a public "non-desertion agreement" to prove their loyalty to the country, adding that "The president should issue an executive order that says any company that wants to keep its federal contracts must sign."
The argument was met with derision by many,
including The Wall Street Journal, which questioned if Atler was joking. It labeled the idea "outlandish," and noted that it "ignores the double-taxation problem."
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