Largest American Drugstore Chain Decides Not To Dodge Taxes By Moving Headquarters Overseas

Bryce Covert

Bryce Covert Economic Policy Editor, Think Progress

Largest American Drugstore Chain Decides Not To Dodge Taxes By Moving Headquarters Overseas

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.

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This has been reposted from Think Progress.

Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media. Follow her on Twitter @brycecovert

Posted In: Allied Approaches, From the News

Union Matters

Powering America

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

Fierce thunderstorms, heavy snows and unusually powerful hurricanes ravaged America’s fragile power grid and plunged millions into darkness this year.

And even as these natural disasters wreaked havoc across the country, COVID-19 stay-at-home orders sparked a surge in residential electrical demand, placing new stress on a failing system.

A long-overdue overhaul of the nation’s electrical infrastructure would not only ensure America continues functioning during a crisis but help to reinvigorate the pandemic-shattered economy.

Built in the 1950s and 60s, most of America’s electricity transmission and distribution infrastructure lives on borrowed time. Engineers never designed it to withstand today’s increasingly frequent and catastrophic storms fueled by climate change, let alone the threats posed by hackers and terrorists.

To ensure a reliable power supply for homes, schools and businesses, America needs to invest in a more resilient, higher capacity grid.

That means either burying electrical lines or insulating above-ground wires and replacing wooden utility poles with structures made of steel or concrete. Other strategies include creating a battery-storage system to provide backup power, building coastal barriers to protect infrastructure against storm surge and further diversifying into wind and solar production.

Also, a shift toward more localized generation and distribution networks would limit the impact of any one power outage.

Making these upgrades with U.S.-made materials and labor will both stimulate the economy and protect national security. American steelworkers, tradespeople and manufacturing workers have the expertise to build a power grid strong enough to weather whatever storms come America’s way.

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