At Walgreen, renouncing corporate citizenship

[thelakelander]

Walgreens possibly moving their corporate headquarters to Switzerland.

A little less than two years ago, Gregory D. Wasson, the chief executive of Walgreen, sought a series of tax breaks from Illinois, where his company is based

"We are proud of our Illinois heritage," he said at the time. "Just as our stores and pharmacies are health and daily living anchors for the communities we serve, we as a company are now recommitted to serving as an economic anchor for northeastern Illinois."

The state gave Walgreen $46 million in corporate income tax credits over 10 years in exchange for a pledge to create 500 jobs and invest in upgrading its offices. The state also provided $625,000 in training money and $875,000 in other tax incentives.

Mr. Wasson's actions, however, could soon run counter to his words. The same chief executive who said he was so "proud of our Illinois heritage" is now considering moving the company's headquarters to Switzerland as part of a merger with Alliance Boots, a European drugstore chain.

Why? To lower Walgreen's tax bill even further.

full article: http://finance.yahoo.com/news/renouncing-corporate-citizenship-001240207.html

[spuwho]

Driven by greed.

A bevy of large investors is pressing Walgreen to make the move abroad. Jana Partners, Och-Ziff Capital Management, Goldman Sachs and Corvex held a meeting in Paris with Walgreen in hope of persuading it to move. Goldman has tried to distance itself from the debate by publicly saying that it did not take a position at the meeting.

They can do what they want under the law, but if a company is making good money, can support its business and employees and has no debt distress and can fund capex, then why invert?

Because those large investors are thinking short term and a way to make their fees and profits on their holdings now.

[JeffreyS]

^Yes that is the basic problem with the stock market system of investing.

We need to change our tax code so that any business you do here is taxed the same no matter where your HQ is.

[ben says]

Long Live the Free Market! Capitalism Rocks!

[Traveller]

We need to change our tax code so that any business you do here is taxed the same no matter where your HQ is.

That is called a territorial system of taxation and one that has been advocated by many.  Unfortunately, it is scored as a revenue loser in the short-term is therefore unlikely to pass anytime soon.  In the long-term, however, our current system will be a much larger revenue loser in my opinion.

[finehoe]

So are corporations still people if they move overseas? 

[bill]

So are corporations still people even if they kill their customers like GM?

[carpnter]

The way Walgreen's charges (charged) for prescriptions is reason enough not to shop there.  They may have changed the practice now, but if you had a $10 co-pay for drugs, it was a sure bet that you were going to pay the $10 even though you could get it for $8 at CVS, Target, or another pharmacy. 

[marty904]

We need to change our tax code so that any business you do here is taxed the same no matter where your HQ is.

That is called a territorial system of taxation and one that has been advocated by many.  Unfortunately, it is scored as a revenue loser in the short-term is therefore unlikely to pass anytime soon.  In the long-term, however, our current system will be a much larger revenue loser in my opinion.

That system would also mean that all those online purchases you make, where you do not pay any taxes, would now be taxed. It would also create a huge corporate relocation because many companies use the tax strategies in different locations as a major reason why they establish their corporate HQ's there.  Florida is favorable, for example, because we have no state taxes here.

If we keep advocating reform, restrict, regulation... we will no longer be the country we are. Take it back to the basics of "free enterprise", "free country"... Let them move wherever they want, for whatever reasons they want and enjoy the fact that we have enough competition in this country to just go shop somewhere else.

[finehoe]

If we keep advocating reform, restrict, regulation... we will no longer be the country we are. Take it back to the basics of "free enterprise", "free country"... Let them move wherever they want, for whatever reasons they want and enjoy the fact that we have enough competition in this country to just go shop somewhere else.

You forgot "free ride" which is what corporations who want to make use of everything the country has to offer but don't want to pay for it are getting.

[riverside_mail]

Even if the corporate tax rate was lowered, the investors still wouldn't be satisfied. They'd still be pushing for tax dodges to get to as close to zero as possible.

[JeffreyS]

We need to change our tax code so that any business you do here is taxed the same no matter where your HQ is.

That is called a territorial system of taxation and one that has been advocated by many.  Unfortunately, it is scored as a revenue loser in the short-term is therefore unlikely to pass anytime soon.  In the long-term, however, our current system will be a much larger revenue loser in my opinion.

That system would also mean that all those online purchases you make, where you do not pay any taxes, would now be taxed. It would also create a huge corporate relocation because many companies use the tax strategies in different locations as a major reason why they establish their corporate HQ's there.  Florida is favorable, for example, because we have no state taxes here.

If we keep advocating reform, restrict, regulation... we will no longer be the country we are. Take it back to the basics of "free enterprise", "free country"... Let them move wherever they want, for whatever reasons they want and enjoy the fact that we have enough competition in this country to just go shop somewhere else.

Sillyness there has never been American "free enterprise" we have been regulated trade and mixed market economy from the start.  Our founding fathers had seen the East India Company and didn't want any part of that type of business.  They even kept corporations from being legal for many years then gave them limited life spans and made them prove their basic business was in the public good for long after that. 

Free market sounds good but what it really results in is Mogadishu.

[Traveller]

We need to change our tax code so that any business you do here is taxed the same no matter where your HQ is.

That is called a territorial system of taxation and one that has been advocated by many.  Unfortunately, it is scored as a revenue loser in the short-term is therefore unlikely to pass anytime soon.  In the long-term, however, our current system will be a much larger revenue loser in my opinion.

That system would also mean that all those online purchases you make, where you do not pay any taxes, would now be taxed. It would also create a huge corporate relocation because many companies use the tax strategies in different locations as a major reason why they establish their corporate HQ's there.  Florida is favorable, for example, because we have no state taxes here.

What does a territorial income tax system have to do with online purchases, or to which state companies move their headquarters?  Territorial means corporations would pay U.S. income tax only on income earned in the U.S. regardless of their country of domicile.  Income earned in foreign countries would be taxed in those countries exclusively.  As it stands now, countries incorporated in the U.S. pay U.S income tax, at one of the highest rates in the world, on income earned everywhere, both here and abroad.  It should come as no surprise that companies do whatever they can (moving IP to Ireland, redomesticating to Switzerland, keeping foreign cash abroad, etc.) to minimize their overall tax liability.  Eventually, I fear the only corporations paying U.S. income tax will be the small businesses too small to move.

Also, for the record, Florida does have a 5.5% corporate income tax rate.  It's individuals that don't pay income tax here.  Moreover, online purchases are indeed subject to tax in Florida.  The buyer is obligated to pay use tax whenever the retailer fails to collect sales tax (which Amazon does now, by the way).

[NotNow]

Yahoo: Tech Companies May Join Flight from US Taxes
Wednesday, 02 Jul 2014 06:58 PM

By John Morgan


American technology companies have not jumped on the bandwagon yet in the trend toward U.S. corporations moving their headquarters to other countries to escape high taxes, but analysts say that could change.

Yahoo Finance predicted the practice, called tax inversion mergers, could have special appeal for tech firms.

Other industries are already moving toward that strategy. Using tax inversion strategies, Walgreen is contemplating shifting its tax basis to Switzerland as part of a merger with Europe's Alliance Boots, and medical device concern Medtronic is eyeing a corporate move to Ireland in its merger with Covidien.

"The strategy also allows companies access to cash held overseas without paying the 35 percent U.S. tax. That's a big issue for many tech companies," wrote Yahoo's Aaron Pressman.

Morgan Stanley's Katy Huberty suggested Lexmark International, Teradata and NCR are three particularly tech firms that could benefit from an overseas tax move.

"All three have loads of cash overseas and enough profits to benefit from a tax cut. None of the companies have said they are planning a tax inversion deal," Pressman said.

Christopher Rolland, an analyst at FBR & Co., speculated semiconductor firms like Texas Instruments, NVDIA and Xilinix could also profit from a tax-related relocation. "The potential for a change in the tax code could provide a powerful incentive for companies to
consummate transactions before the window closes, perhaps at the end of the year," Rolland said.

Pressman predicted "there's no doubt Wall Street bankers will be pitching inversions to all manner of companies, including technology stalwarts."

Bloomberg reported Medtronic is the biggest company yet with plans to renounce its U.S. "tax citizenship."

At least 44 American companies have reincorporated abroad or laid plans to do so, including 14 since 2012, according to Bloomberg. The U.S. corporate tax rate is the highest among developed nations.

Those who have already moved elsewhere, mostly to Europe, include Perrigo, Tower Group, Eaton, Jazz Pharmaceuticals, Alkermes, Valeant, Tim Hortons and Lazard.



http://www.moneynews.com/StreetTalk/Yahoo-Tech-Companies-US/2014/07/02/id/580609/?ns_mail_uid=62858812&ns_mail_job=1575883_07042014&promo_code=58xrydgq

[IrvAdams]

U.S. Firms moving headquarters overseas may sound like unfair avoidance of taxes, etc. but it's certainly not surprising, considering how many American jobs have been transplanted abroad over the past twenty years or so. When you base a system on profit you must brace yourself for whatever a group of individuals may do to maximize it.

We must focus on keeping our workforce sharp and current, since it's the hard-working, intelligent talent pool in this country that makes us the home of choice for most of our large and small firms. We need to support and fund technology studies and college majors in the STEM fields.