Some stories really show you what kind of country we live in. In this case, this story about Walgreens shows us that other countries are friendlier to business and that people are scared of the U.S. government finding ways to punish you for doing things that are perfectly legal..
From the CNBC website:
At a private meeting in Paris on Friday, investors owning close to 5 per cent of Walgreens’ shares lobbied the company’s management to use its $16bn takeover of Swiss-based Alliance Boots to re-domicile its tax base.
The move, known as an inversion, would dramatically reduce Walgreens’ taxable income in the US, which has among the highest corporate tax rates in the world.
The investor group, which included Goldman Sachs Investment Partners and hedge funds Jana Partners, Corvex and Och-Ziff, requested the meeting after becoming frustrated by Walgreens’ refusal to consider relocating, according to people familiar with the matter.
So what would be the downside to such a move? While the story expresses the matter delicately, the problem is that the government would engage in reprisals against Walgreens.
Existing rules mean that a US company can forgo its domestic tax status through a deal that transfers more than 20 per cent of its shares to foreign owners.
A tax inversion by Walgreens would be likely to face strong political resistance in the US, where the practice has become increasingly popular during the past two years, particularly in the pharmaceutical sector.
What a lovely term: “strong political resistance.” What could it possibly mean? We are left guessing; the story never spells it out.
But if Sharyl Attkisson can be pressured to resign as a journalist, other businesses can be damaged as well in many different ways.
That’s quite a country we live in, isn’t it. Not only are there other countries with lower taxes for a business, but those places are so tempting that our only hope in keeping a company here is by threatening them with damage if they try to defect.