Pfizer’s chairman and chief executive, Ian C. Read, is in London this week trying to sell a skeptical public there on his $106 billion takeover plan for rival AstraZeneca.
On Tuesday, he is scheduled to testify to a parliamentary committee
about a deal that has been described in the British tabloids as “too
dangerous” and has raised a bevy of nervous questions about potential
job losses. The real question, however, is why Mr. Read
is not being called to testify in Washington to explain the real purpose
of this megadeal: a mega-tax-dodge.\
On Tuesday, he is scheduled to testify to a parliamentary committee
about a deal that has been described in the British tabloids as “too
dangerous” and has raised a bevy of nervous questions about potential
job losses. The real question, however, is why Mr. Read
is not being called to testify in Washington to explain the real purpose
of this megadeal: a mega-tax-dodge.\
Pfizer’s pursuit of AstraZeneca raises a huge
public policy red flag. It plans to move its holding company to Britain
from the United States so it can achieve a much lower tax rate and use
cash that it has held abroad to avoid paying United States taxes. The deal, if consummated, would most likely
deprive the United States government of billions of dollars in revenue
over the next decade. Pfizer isn’t hiding this fact. Mr. Read has
repeatedly told his investors about the tax-saving scheme. “It will
liberate the balance sheet and tax of the combined companies,” he said
over the weekend.....
public policy red flag. It plans to move its holding company to Britain
from the United States so it can achieve a much lower tax rate and use
cash that it has held abroad to avoid paying United States taxes. The deal, if consummated, would most likely
deprive the United States government of billions of dollars in revenue
over the next decade. Pfizer isn’t hiding this fact. Mr. Read has
repeatedly told his investors about the tax-saving scheme. “It will
liberate the balance sheet and tax of the combined companies,” he said
over the weekend.....
A Deal to Dodge the Tax Man in America - NYTimes.com
First off, this is a smart move by Reed at Pfizer in terms of trying to get more free cash flow for his company. Secondly, this is bad for the United States because this has been a trend that deters businesses from operating or having there head quarters in United States. Not only does the U.S. lose out on tax revenue but they also lose out on potential jobs, and a foreign country reaps the benefits.
ReplyDeleteI completely agree with Mark. This is a smart move for Phizer and it highlights the flaws in the structure of the U.S. tax system.
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