Tax consequences of Pfizer-Allergan merger

An example of the welfare mentality of the power elite. Drug companies get a lot of money from Medicare, but they don't want to pay taxes on their profits.

http://www.chicagotribune.com/business/ct-pfizer-allergan-1124-biz-20151123-story.html

Dick Durbin derides tax consequences of Pfizer-Allergan merger

Ameet Sachdev Contact Reporter Chicago Tribune
Nov. 23, 2015

A deal to create the world's largest drugmaker by sales has raised the hackles of an Illinois senator.

Dick Durbin criticized the proposed merger between Pfizer and Allergan because it would shift the corporate address of the combined company from the United States to a country with a lower corporate tax rate. Such a transaction is known as a "tax inversion." The Pfizer-Allergan merger would be the largest inversion ever.

"When corporations choose to invert and don't pay their fair share of taxes, they leave the rest of us to pick up the tab," Durbin said in a statement. "That isn't right, and I hope Pfizer will reconsider."

The Democrat lawmaker has railed against inversions since last year when Walgreens and AbbVie, two companies based in Illinois, consider the tax-saving maneuver as part of takeovers of foreign rivals. Durbin has described inversions as a "clever tax dodge."

Walgreens decided against relocating to Europe as part of a deal to acquire the remainder of Alliance Boots, another drugstore chain that has many stores in the U.K. but is based in Switzerland. AbbVie terminated its $54 billion acquisition of Shire, based in Dublin, after the Obama administration changed tax rules in an attempt to eliminate the financial benefits of inversions.

But the tax maneuver remains popular despite U.S. efforts to curb the practice.

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Pfizer structured the deal — under which smaller Allergan is taking it over and Allergan shareholders control 44 percent of the combined company — in order to bypass the U.S. Treasury Department's efforts to deter inversions. Upon the closing of the transaction, the combined company is expected to maintain Allergan's Irish legal domicile.

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