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Largest American Drugstore Chain Decides Not to Dodge Taxes by Moving Headquarters Overseas

Largest American Drugstore Chain Decides Not to Dodge Taxes by Moving Headquarters Overseas

Written by Bryce Covert

Walgreen Co announced on Wednesday that it won’t go through with its acquisition of Switzerland-based Alliance Boots, a move called an “inversion” that would have shifted company headquarters overseas to avoid paying U.S. taxes.

While it will still go through with buying all of Alliance Boots’s shares, Walgreen will still be based in the Chicago area.

In a statement about the decision, the company said that it was “mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs.” CEO Greg Wasson also said that after an “extensive and rigorous analysis,” the company “could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny,” saying that “it was not in the best long-term interest of our shareholders.”

The company’s decision not to move its headquarters overseas via an acquisition is the third major potential deal to collapse in recent months.

Companies have come under increased scrutiny for this move, with Congressional hearings, statements from President Obama, and lawmakers urging action to stem the tide. Rep. Sander Levin (D-MI) introduced a bill to close a loophole that makes inversions legal. Sens. Dick Durbin (D-IL), Jack Reed (D-RI), and Elizabeth Warren (D-MA) sent a letter to President Obama on Tuesday urging him to take action on the issue. And on the same day, the Treasury Department announced that it was looking at “a broad range of authorities” for ways to limit companies’ ability to do inversion deals as well as ways to “meaningfully reduce the tax benefits” of such moves.

Yet plenty of deals look ready to move ahead, such as Pfizer’s takeover of AstraZeneca, which would save the company $1 billion in taxes each year with its headquarters abroad, and AbbVie, maker of Adderall and other drugs, acquiring Shire. The rate of inversion deals has accelerated recently, with more than half of the 76 companies that have done these deals in the last three decades completing them since the recession. About a dozen companies have made the move this year, and dozens could still come. These deals are costing the country between $30 billion and $90 billion a year in tax revenue.

While these companies aren’t supposed to get federal contracts, the ban is so easy to get around that more than a dozen of those who have moved their headquarters offshore get more than $1 billion a year in government work.

This post originally appeared on ThinkProgress.

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Photo Credit: Thinkstock

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3:36PM PDT on Aug 23, 2014

Why should we CATER to companies Sarah?? They dont se their country disintegrating and crumbling?? They dodnt feel any allegiance to their country??

If they want to go LET them. Someone who wants to help their COUNTRY and not themselves might be a refrasshing change.

They have PLNTY of advantages and they are making RECORD BREAKING PROFITS!!!! So is the investor class. Its only US thats getting screwed. It istn MY job or YOUR job to make sure companies make a profit. if they build what I want I will buy ift if I can make enough money to buy it
Thats the END of my allegiance. They arent showing me a reason to show them allegiance.

5:20AM PDT on Aug 23, 2014

If we want people & companies to stay in the US, we need to make it advantageous for them to do so. That means lower taxes, less regulations and more opportunities.

8:06AM PDT on Aug 22, 2014

I belieone any person or any corporate bigwigs who give up American citizenship should never be allowed to stay in the U.S. ever again. visiting visa, ok, but not ever allowed to live here.

where did these corporations start? the U.S. infrastructure and the people in the U.S. helped create them. if they don't want the U.S., then I don't want them.

11:28AM PDT on Aug 15, 2014

Congratulations David. They have you completely brainwashed. They are making RECORD BREAKING PROFITS even with taxes where they are!! If you want to lower taxes then we MUST lower our military presence around the world. WE cant starve our own damned people so we can “save” people on the other side of the globe. Look at the hisotry books David. Every super oower who has tried to do what we are presently doing has fallen. its happening to us right now even though your blinders wont allow you to see it. Hurting your own citizens for nothing but corporatte profit is a recipe for dissaster that is already beginning to happen.

RECORD BREAKING profits David. Not just normal profit. Get it?? Trickle down is NOT HAPPENING!!!

8:57PM PDT on Aug 14, 2014

Robert, This world rotates on supply and demand, it's capitalism and consumers that control the economy weather you like it or not, government only interferes with a countries ability to compete.

Protectionism devastates economies and the people it tries to protect.
Exceptions are reactions to protectionism decreed by other governments against our own products.

If China wants to base a company in Ireland and pay lower taxes, they will devastate as they do now, overtaxed US companies.

The US government can't do squat about that, except the stop taxing the US companies.

Why is it liberals can never understand that US corporations do not pay tax, it's the low information voters that pay.

10:45PM PDT on Aug 12, 2014

Glad Walgreens made that decision.

6:29PM PDT on Aug 12, 2014

A very astute point that you made, Robert H when you stated:

"WE need to stop centering our lives around the wants and desires of the investor class."

So true, they also often do make insane profits. One hardly feels sorry for the 'hard done by' corporations of the world. Cry me a river, lol.

A mocktail, David F? I agree with Charles S when he says about your country:

"Let them pay their fair share , and support our country."
Corporations get away with a lot when it comes to taxes, as do much of the rich.

David F said: "Another State media puke by Think Regress." There is no 'state media' in the U.S., it is hardly North Korea. They have state media, in fact there, that is the only media. "Regress," that sounds like an apt description of the Republican party.

"Dimwitocrats," David F? What is that, you keep on listening to Faux 'News'? There are more enlightened media out there, none of them con-servative.

8:46AM PDT on Aug 12, 2014

Good…..we have been the leader long enough and things arent getting better they are getting WORSE. Let someone else carry the load for a while because IT COSTS A FORTUNE to carrry the load. Let someone else have a military that spends more than the GDP of most countries. Someone has to pay for this country to stay where it is and as more and more people are making less and less there is less revenue to spend. So OF COURSE you and your ilk want to take it away from the little people who are pawns in all of this crap. You and your ilk want the water and air to be compromised so we can be like China.

WE need to stop cerntering our lives around the wants and desires of the investor class.
The last time we centered our entire economy around the stock market we ended up wirth a crash. These issues are more complicated than simply screaming capitalism at everyone. Corporations cant keep taking and taking and giving nothing back to their home country except for investors. You listen to every single WHINE from the corporations and tell all the little people to just DEAL WITH IT. There will come a day the little people are going to give your ideals the finger and revolt. We can only HOPE they continue with some form of capitalism. It would be much smarter for corporations to realize they are pushing too hard so they don’t lose is ALL. BALANCE. We NEED balance back.

4:48AM PDT on Aug 12, 2014

noted

9:43PM PDT on Aug 11, 2014

soooooooo in other words we will be brought down to the worlds level and they will meet us somewhere in the middle. wonderful plan. I hope you like substandard everything.

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