Walgreens possibly moving their corporate headquarters to Switzerland.
QuoteA 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
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.
^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.
Long Live the Free Market! Capitalism Rocks!
Quote from: JeffreyS on July 01, 2014, 11:33:58 PMWe 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.
So are corporations still people if they move overseas? :o
So are corporations still people even if they kill their customers like GM?
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.
Quote from: Traveller on July 02, 2014, 09:15:27 AM
Quote from: JeffreyS on July 01, 2014, 11:33:58 PMWe 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.
Quote from: marty904 on July 03, 2014, 08:35:47 AM
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.
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.
Quote from: marty904 on July 03, 2014, 08:35:47 AM
Quote from: Traveller on July 02, 2014, 09:15:27 AM
Quote from: JeffreyS on July 01, 2014, 11:33:58 PMWe 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.
Quote from: marty904 on July 03, 2014, 08:35:47 AM
Quote from: Traveller on July 02, 2014, 09:15:27 AM
Quote from: JeffreyS on July 01, 2014, 11:33:58 PMWe 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).
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
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.
"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."
Elections have consequences. :(
"extra expatriate charge"
Would you mind letting us in on what your definition of this would be?
http://econlib.org/library/Enc/Protectionism.html
Quote from: NotNow on July 05, 2014, 10:46:37 AM
The U.S. corporate tax rate is the highest among developed nations."
"... the Government Accountability Office, examined corporate tax returns to determine the taxes corporations actually pay. It found that in 2010, profitable corporations based in the United States had
an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes."
http://gao.gov/products/GAO-13-520
Quote from: NotNow on July 05, 2014, 10:46:37 AM
Elections have consequences.
So true. So if you want your taxes to be higher to make up for corporations that aren't paying nearly the same rate you are, keep voting the way you do.
Quote from: finehoe on July 06, 2014, 01:14:24 PM
Quote from: NotNow on July 05, 2014, 10:46:37 AM
The U.S. corporate tax rate is the highest among developed nations."
"... the Government Accountability Office, examined corporate tax returns to determine the taxes corporations actually pay. It found that in 2010, profitable corporations based in the United States had an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes."
http://gao.gov/products/GAO-13-520
Quote from: NotNow on July 05, 2014, 10:46:37 AM
Elections have consequences.
So true. So if you want your taxes to be higher to make up for corporations that aren't paying nearly the same rate you are, keep voting the way you do.
If you want to keep seeing American business wither on the vine, keep voting the way you do.
I will keep voting the way I do. I am opposed to the income tax system at this point. Once again, the Founding Fathers were spot on.
Quote from: stephendare on July 06, 2014, 10:03:33 PM
Quote from: NotNow on July 06, 2014, 08:52:35 PM
Quote from: finehoe on July 06, 2014, 01:14:24 PM
Quote from: NotNow on July 05, 2014, 10:46:37 AM
The U.S. corporate tax rate is the highest among developed nations."
"... the Government Accountability Office, examined corporate tax returns to determine the taxes corporations actually pay. It found that in 2010, profitable corporations based in the United States had an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes."
http://gao.gov/products/GAO-13-520
Quote from: NotNow on July 05, 2014, 10:46:37 AM
Elections have consequences.
So true. So if you want your taxes to be higher to make up for corporations that aren't paying nearly the same rate you are, keep voting the way you do.
If you want to keep seeing American business wither on the vine, keep voting the way you do.
I will keep voting the way I do. I am opposed to the income tax system at this point. Once again, the Founding Fathers were spot on.
yawn. you literally have no idea what system of economics or taxation the Founding Fathers believed in do you?
No I do no not. Please educate me Mr. Wizard. Please also include your research on Global warming/cooling/climate change etc.
So your definition of "extra expatriate charge" is...a tariff? You are advocating protectionist tariffs, just to be clear? And a ban on foreign corporations ability to contribute to political causes in the U.S., right?
Interesting (defensive) response. You called for a "extra expatriate charge". I asked you what you meant by that term. You posted two articles, one advocating "protectionism" and one advocating bans on foreign based corporations participating in US political causes. I then asked if your posting constituted your explanation for the term "extra expatriate charge". And you accuse me of not being able to read, not knowing your name, calling for higher taxes, and calling for reduced taxes for foreign corporations.
The message that I am getting is that you don't really want to discuss this. I won't bother asking you for clarification of your statements again.
Moving our business immediately to another pharmacy corporation - currently a US one.
Quote from: Jumpinjack on July 07, 2014, 12:29:52 PM
Moving our business immediately to another pharmacy corporation - currently a US one.
Likewise here. There's also a fair bit of mom and pop pharmacy's around. Granted, they don't sell motor oil like Walgreens and CVS, but they do prescriptions just fine.
(http://www.ritholtz.com/blog/wp-content/uploads/2014/07/Br8ZRliIYAAksS_.jpg)
http://fortune.com/2014/07/07/taxes-offshore-dodge/
Excellent article! Thanks FH. The author actually offered some viable solutions. Let's see if any of them are adopted. (I doubt it.)
states use tax breaks to 'woo' US companies from other states all the time. Congress does it to encourage (or discourage) certain behaviors almost constantly.
Why then do we act surprised when other people/states/countries do the same thing?
meh-
The 35% rate is part of the problem. If corporations are "really" paying !8% - 20%, then why don't we just put the tax rate there? Because the government wants to be able to dictate who pays 35% and who pays 10%. Just set the corporate rate at 20%, without any loopholes or favoritism. Attempts at domestic protectionism will be met by retaliatory moves by other governments. But I wouldn't be opposed to a more judicious use of tariffs against those that use protectionist laws against US corporations.
Quote from: NotNow on July 09, 2014, 04:15:49 PM
meh-
The 35% rate is part of the problem. If corporations are "really" paying !8% - 20%, then why don't we just put the tax rate there? Because the government wants to be able to dictate who pays 35% and who pays 10%. Just set the corporate rate at 20%, without any loopholes or favoritism. Attempts at domestic protectionism will be met by retaliatory moves by other governments. But I wouldn't be opposed to a more judicious use of tariffs against those that use protectionist laws against US corporations.
Corporations are "really" only paying 18-20% because for tax purposes they make X here in the US and the rest overseas where the rates are lower making for an effective rate of X. My company monitors this on a monthly basis and it is usually one of the first analyst questions on our earnings calls.
Another reason many corporations paid little to no U.S. income tax during the recession was a provision known as "bonus depreciation". In order to stimulate capital investment, Congress allowed companies to deduct 50 to 100% of the cost of property placed in service between 2008 and 2013. Normally, such property would be depreciated over its useful life--5 to 10 years in most cases.
As a result, corporations that were making millions in book profits were showing very little taxable income, and in many cases realizing a tax loss, one that could be carried back to prior years in order to claim refunds. For financial reporting purposes, they would have to record a deferred tax expense and deferred tax liability to account for the loss of future depreciation deductions, so their effective tax rate wouldn't be impacted. But from a cash standpoint, their tax rate was nil. Journalists tend to pick whatever tax rate fits the narrative of their article.
The bonus depreciation provisions worked exactly as Congress intended. Heck, they're discussing extending them as I type this.
Quote from: stephendare on July 09, 2014, 03:57:08 PM
Quote from: fsquid on July 09, 2014, 03:49:52 PM
states use tax breaks to 'woo' US companies from other states all the time. Congress does it to encourage (or discourage) certain behaviors almost constantly.
Why then do we act surprised when other people/states/countries do the same thing?
huh?
Since this is a tax evasion technique that originated in American accounting practices, I'm not sure if you think this is an example of other counties providing tax incentives.
If you recall, Manufacturing had the same shell game going on, with similar claptrap about the 'hidden hand of the market' and self immolating idiots suggesting that if only America could pay American workers the same 8 dollars a day that Indonesian slaves and child laborers would work for, we wouldn't see American factories opening up overseas.
Yeah. Turns out that once we trained Chinese, Indonesian, and Indian labor forces to use our techniques, they didn't need American assholes to produce the same products and sell them to Americans.
That turned out well.
Tax expatriate companies will find out the same thing over the next ten years. Once all that capital is just lying around in foreign countries, there is literally nothing to keep them from taxing it.
Hopefully, it becomes tax advantageous for it to come back.
Sure, but so too can the US raise taxes.
Moving company HQs was a far bigger deal in 1930 and even 1980 than today... and is only getting easier.
Of course, as most goods are consumed in the US and we are seen as being stable, we don't have to absolutely be the cheapest to KEEP people here... We can be slightly disadvantageous vs other countries and still keep Walgreens or WalMart...
but this is only PART of the equation. The bigger question is how do we get some of those who have left to come back? Or how do we get those who were never here to come here? If a company has been somewhere else for 10 or 50 years, what do we need to do to make them come here? Wait for those other countries to screw them?
Obviously we can't be non-competitive tax-wise AND/OR non-competitive in labor costs... unless we save them an absolute fortune in shipping costs.
Quote from: fsquid on July 11, 2014, 03:37:23 PM
The bigger question is how do we get some of those who have left to come back?
I say good riddence. We just need to draft a law so that the members of the C-suite and their families lose their citizenship as well, and have to move with the company. I suspect that would solve the problem quite quicklyu.
Quote from: finehoe on July 11, 2014, 04:03:38 PM
Quote from: fsquid on July 11, 2014, 03:37:23 PM
The bigger question is how do we get some of those who have left to come back?
I say good riddence. We just need to draft a law so that the members of the C-suite and their families lose their citizenship as well, and have to move with the company. I suspect that would solve the problem quite quicklyu.
My, we are quite the liberal tyrant today, aren't we?
Quote from: NotNow on July 11, 2014, 04:10:49 PM
My, we are quite the liberal tyrant today, aren't we?
I thought conservatives didn't like "moochers". ;)
Almost as much as we don't like tyrants. ;)
My opinion on corporations leaving the country hasn't changed, neither has my opinion of Democrats "forgetting" about the Constitution.
Take it up with Mr. Lincoln and the Supreme Court. Because, they are the real thing. lol....
President Obama took a novel approach to the Habeous Corpus question though. Just kill the citizen instead. MUCH more efficient than Lincoln and Bushes approach. If your a tyrant.
Quote from: stephendare on July 11, 2014, 05:51:33 PM
Quote from: NotNow on July 11, 2014, 05:41:42 PM
President Obama took a novel approach to the Habeous Corpus question though. Just kill the citizen instead. MUCH more efficient than Lincoln and Bushes approach. If your a tyrant.
In other words, you don't really have anything to add to the discussion about corporations using the US for profit, incentives, protection and special legislative favors and then leaving the country once they've milked the system.
Unsurprising I suppose.
That's cute. I answer your post and you accuse me of getting off subject.