There has been a growing number of American corporations that love making billions of dollars off the people supporting this nation, but absolutely hate and refuse to pay income taxes here. Despite what Republicans claim, corporations or rich people that hide their money off-shore to avoid contributing to America are the real “takers” in this society. On Monday, the Obama Administration made a move to stop a pharmaceutical corporation from taking even more from the people.
While the wealthy have stashed their millions in untaxed offshore accounts, corporations have filed “change of address” documents for their corporate offices and completely avoided paying any taxes on their billions in profits. One of the latest corporations angling to make that particularly deceitful move is the largest pharmaceutical corporation in America, Pfizer. Pfizer intends to “merge” with another corporation to change its corporate address to Dublin, Ireland, and escape ever having to pay American taxes.
The pharmaceutical giant is planning to merge with a corporation tax-sheltered in Ireland, Allergan, in a $160 billion deal; the largest in the pharmaceutical industry’s history. The big prize for Pfizer and its shareholders is that the new company (called Pfizer) will have as its corporate address, Dublin Ireland; a highly-prized tax-exempt domicile.
Because Koch Republicans run Congress, most experts in the field of corporate taxes were certain that there was nothing whatsoever President Obama could do to stop Pfizer’s “tax-escape-by-merger” plan. Those experts were wrong and they once again underestimated this President’s will to stop tax cheats.
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On Monday, Treasury Secretary Jack Lew laid down a new rule on “corporate tax inversions” calling Pfizer’s bluff, and to make the corporation’s move painful. The maneuver certainly got Pfizer’s attention and more importantly; it has “Pfizer’s investors reeling.” As one pundit noted, the move should heat up the discussion about what it means for a company to be considered American, and the fairness of the U.S. corporate tax code.
President Obama addressed the unfairness of a corporation like Pfizer simply merging for the purpose of filing a “change of address” card to stop paying taxes on its monumental profits. The President told CNBC last year that,
“There are a whole range of benefits that have helped to build companies, create value, and create profits. For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes, is neither fair, nor is it something that’s going to be good for the country over the long term.”
So, the Treasury is proposing a new rule for the purpose of putting major pressure on the latest Pfizer-Allergan merger deal that would allow the pharmaceutical giant to grow bigger and change its address. Secretary Lew’s announcement means that none of the shares that resulted from a fairly large number of mergers involving Pfizer that occurred in the past three years count toward Pfizer being a corporation big enough to avoid paying taxes.
It may not seem like a big deal, but if through its many mergers over the past three years Pfizer ends up owning 60 percent of the new bigger Pfizer, it triggers a U.S. law that makes the company’s “move to Dublin far more onerous” as Forbes noted; the President’s action could sink the deal before it can be completed. And, as an portent of the effectiveness of the Treasury’s action, Monday night after the announcement and after the stock market closed shares in Allergan fell 22 percent and Pfizer shares rose only 2.9 percent. It was a stunning 19 percent drop that has both company’s investors very, very nervous.
Pfizer has spent the past three years acquiring smaller pharmaceutical companies in an effort to grow large enough to merge with Allergan to change its address to Ireland and thus avoid paying its fair share in taxes. The Obama Administration, through the Treasury Department, is well within its purview and right to attack the devious “strategy of daisy-chaining corporations together” to either avoid paying taxes or to get a better tax rate.
The bottom line is that all of these deals and machinations by Pfizer were funded in great part by the American taxpayers. Every company that was bought out or merged were able to reduce its U.S. tax rate. In Pfizer’s case, they created a series of larger and larger companies to be able to merge with Allergan and an exemption from paying income taxes.
President Obama, like most Americans, has been pretty clear that these companies have benefited from taxpayer-funded research by the National Institutes of Health as well as the American scientists who were “trained by Stanford, M.I.T. and Harvard.” They damn well should pay their share in taxes after benefiting from the taxpayers and the nation’s largesse.
It seems obvious that Pfizer will fight the Treasury Department’s proposal and that Republicans will be behind them at every turn. No American can avoid paying their fair share of taxes, unless they are wealthy enough to spirit their money away to offshore tax havens, or corporations filing a change of address of their “corporate office” even though they operate and make their billions in America.
This is just another case of President Obama stepping in to do the work the Republican-controlled Congress refuses to even consider doing; protect the taxpayer and against all odds attempt to make corporations pay their fair share.
Audio engineer and instructor for SAE. Writes op/ed commentary supporting Secular Humanist causes, and exposing suppression of women, the poor, and minorities. An advocate for freedom of religion and particularly, freedom of NO religion.
Born in the South, raised in the Mid-West and California for a well-rounded view of America; it doesn’t look good.
Former minister, lifelong musician, Mahayana Zen-Buddhist.
