Nov 23, 2015 | By CAP Action War Room
This morning, pharmaceutical companies Pfizer and Allergan announced they would complete a huge $155 billion merger that would create a super-giant pharmaceutical company. Though this move will be, as Pfizer says, “a great deal for shareholders,” this merger is bad news for American taxpayers. It will allow Pfizer to avoid paying tax on the $148 billion it has offshore and enjoy Ireland’s lower taxes, enabling Pfizer to receive a massive tax windfall.
Pfizer is able to dodge taxes through a tax maneuver known as a “corporate inversion.” An inversion allows a big, multinational company—in this case Pfizer—to buy a smaller company in a country with lower taxes and changes its legal residence to the lower-tax country. Corporate inversions, which President Obama calls an “unpatriotic loophole,” allows companies to have it both ways. Companies that undergo inversions can still use American infrastructure and benefit from American law and labor, but without paying U.S. tax on income that its investments generate outside the U.S—meaning they aren’t contributing their full share to support our programs, infrastructure, and workers. Since 2010, ten pharmaceutical companies have used inversions to shirk their tax responsibilities.
Under the deal that Pfizer and Allergan made this weekend, Pfizer will buy Allergan and then make itself a subsidiary of Allergan in order to shift the combined company’s corporate address to Ireland—where Allergan is headquartered and a country with a reputation as a tax haven for a number of American companies. But this is only the latest chapter in Pfizer’s history tax dodging.