According to a recent estimate, Pfizer will save around $35 billion in taxes by reincorporating overseas.
From the Washington Post:
When Pfizer announced its plan last year to merge with Botox-maker Allergan and move its headquarters to Ireland the company said the deal would lower its tax rate to about 17 percent to 18 percent, saving it about $2 billion over three years.
But in a report published Thursday, Americans for Tax Fairness say the New York-based pharma giant will actually save much more by giving up its U.S. citizenship: $35 billion.
Pfizer is merging with the smaller Dublin-based Allergan in what is known as an “inversion,” in which U.S. companies are bought by or merge with foreign firms in order to reduce U.S. corporate tax burdens. The Pfizer-Allergan deal is the largest inversion ever and has raised angst among lawmakers.
…“We believe the Treasury Department can challenge the theft of taxpayer dollars that Pfizer is counting on under this deal,” said Frank Clemente, executive director of the group.
…Earlier this week, two Democratic lawmakers proposed legislation meant to attack one of the chief benefits of inversions, a practice known as “earnings stripping.” In addition to lowering their tax rate, a company involved in an inversion can often offset taxes with the interest from debt payments made by its U.S. operations to its foreign parent company.
The legislation by Rep. Sander M. Levin of Michigan, the ranking Democrat on the Ways and Means Committee, and Rep. Chris Van Hollen of Maryland, the top Democrat on the Budget Committee, would make that maneuver more difficult and less profitable.
“Challenge the theft of taxpayer dollars“? Really? The extreme leftists in the Democrat party never cease to amaze me. They are actually angry and befuddled that a company would dare try to save 35 freaking billion dollars. Unreal. And they have the audacity to call it “theft”. I need duct tape right now. Think about it for a second. The Feds want to literally steal $35 billion from Pfizer. And when Pfizer objects, the left says that Pfizer is committing theft. What have we become? We are no longer a nation that cherishes liberty.
The US has the highest corporate tax rate in the entire free world. It should surprise exactly no one when companies finally get out of Dodge. Every sane person would do the exact the same thing were they the CEO of Pfizer.
Personally, I don’t really care where Pfizer sets up shop. I mean, all things being equal, sure, I’d prefer them to be in the United States. What American wouldn’t? But we should never make villains out of companies who are simply trying to protect themselves from an oppressive centralized government (see Apple). These extreme left-wing politicians aren’t looking out for the taxpayers. They’re just angry that they won’t be able to take nearly 40% of Pfizer’s profits anymore. They want their cut of the loot.
As the article states, the Dems (not surprisingly) want to figure out ways to punish companies for leaving for “inversion.” This is authoritarianism and it should outrage everyone. It’s the typical statist mentality: “Got a problem caused by too much government? What say we add some government to fix it?”
Similarly, there are some lawmakers who, in an attempt to steer clear of governing like Stalin, think the better alternative is to offer special contracts, rates and deals to encourage companies to stay. This isn’t authoritarianism, it’s corporate cronyism. “Please don’t leave! We’ll give you whatever you want!”
No. Neither of these is the right course of action. What we should be doing is getting the government out altogether and letting the chips fall where they may. Stop taxing companies (and individuals) to death and simply let them do what they’re going to do.