Tags: tax | inversion | Pfizer | Allergan

Tax Policy Blowback Begins on Pfizer-Allergan Mega-Deal

Tax Policy Blowback Begins on Pfizer-Allergan Mega-Deal
(Dollar Photo Club)

Monday, 23 November 2015 03:45 PM

Democratic politicians condemned Pfizer Inc.'s tax-avoiding "inversion" deal with Ireland's Allergan Plc on Monday, bringing another round of Washington hand-wringing over corporate taxes, but probably no immediate legislative action.

Hillary Clinton, the front-runner for the Democratic presidential nomination, blasted Pfizer for using legal loopholes to avoid paying its "fair share" of U.S. income taxes in a deal she said "will leave U.S. taxpayers holding the bag."

"We cannot delay in cracking down on inversions that erode our tax base," the former U.S. secretary of state said in a statement.

Pfizer is doing the largest inversion deal of all time. In a $160-billion transaction, it plans to move its tax address from the United States to Ireland, if only on paper, by buying out a smaller, Dublin-based competitor, Allergan.

Executive management will remain in New York and Pfizer will keep extensive operations across the United States, but the company will no longer have to pay taxes as a U.S. company.

The White House declined to comment on Pfizer's acquisition, but a spokesman told reporters in a briefing that Congress should take action to prevent inversions.

Congress, deeply divided over fiscal issues, was widely seen by policy analysts as unlikely to overhaul the tax code before the 2016 elections. Riddled with loopholes that are deeply embedded in the U.S. economy, the code has not been thoroughly cleaned up since the Reagan administration.

Senator Bernie Sanders, who is Clinton's chief rival for the Democratic nomination, said in a statement that the deal "would allow another major American corporation to hide its profits overseas."

The U.S. Treasury Department last week unveiled new rules to clamp down on inversions, its second attempt to do so since a wave of these deals peaked in September 2014. The latest rules would not impede the Pfizer-Allergan transaction, analysts said.

Clinton said she would propose concrete steps the government could take to prevent inversions, but did not provide details.

Former Maryland Governor Martin O'Malley, another Democratic candidate, said on Twitter that as president he would fight mergers that "offshore taxes and jobs."

Perhaps anticipating its deal would draw fire, Pfizer CEO Ian Read sent a letter on Monday to senior senators. It said, "We will maintain our global operational headquarters in New York City. At the time we close the transaction, we will have over 40,000 employees across 25 states."

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Democratic politicians condemned Pfizer Inc.'s tax-avoiding inversion deal with Ireland's Allergan Plc on Monday, bringing another round of Washington hand-wringing over corporate taxes, but probably no immediate legislative action.
tax, inversion, Pfizer, Allergan
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2015-45-23
Monday, 23 November 2015 03:45 PM
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