November 24, 2015

Slate: Once Again, Pfizer Is Trying to Move Overseas to Avoid U.S. Taxe

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“Keep in mind that when they invert, companies like Pfizer are basically moving their official postal address and not a ton more; it’s not as if Pfizer is uprooting all of its factories and R&D and moving them to Dublin, too. As Matt Gardner, executive director of the Institute on Taxation and Economic Policy, put it earlier this month, “An inversion by Pfizer would very likely amount to pretending to be Irish, much like the Notre Dame mascot.” The merger will probably deal a slight blow to U.S. gross domestic product, since the profits from inverted companies earn aren’t counted toward our national accounts. But that’s not exactly crushing, since at least some of the money will probably get sent back to U.S. investors in the form of dividends. As for taxes, well, Congress’ number-crunchers think inversions will cost the U.S. Treasury about $41 billion over 10 years. However, some recent research out of Northwestern’s Kellogg School of Management suggests that might be off—and that, weirdly enough, inversions might actually increase American tax collections by allowing companies to bring money they were previously hoarding overseas back to their U.S. operations and hand it out to shareholders.”

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