The U.S. Treasury Department is cracking down on corporate inversions. In response to the proposed merger between pharmaceutical giants Allergan and Pfizer, the Treasury Department proposed new rules that would 'wipe out' the massive tax benefits of the largest corporate inversion in our nation's history.
If those two companies had been allowed to merge, Pfizer would have been able to claim the lower corporate tax rate from Ireland, where Allergan is headquartered. That would have allowed Pfizer to skip out on paying their taxes on at least $40 billion dollars of profit that company earned while headquartered in the United States, then stashed away in overseas tax havens.
By using a series of so-called “hopscotch” loans, the new merged company could shift that profit to their new lower-tax home nation, and screw the American people out of a mountain of tax revenue. And, since the Republican-controlled Congress refuses to pass legislation to prevent these tax-dodging corporations from using dirty tricks, the Treasury Department put forward new tax regulations that the Wall Street Journal said, “make it harder for companies to make the arithmetic on inversions add up.”
Frank Clemente of the group Americans for Tax Fairness said, “If our analysis is correct, this is a major victory for taxpayers who pay their fair share and who should expect no less from one of America's biggest and most profitable corporations.”
To most of us, it's simply common sense. American corporations that make massive profits off of American consumers should pay their American taxes.
Hunter Blair of the Economic Policy Institute said, “Sadly, rather than pass more targeted fixes to corporate inversions, a Republican-led Congress has decided to sit on its hands as multinational corporations avoid more and more taxes...”
Until we can elect lawmakers who will act, the Treasury Department should continue to do what they can to stand up to these corporate tax dodgers.
-Thom
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