May 5, 2016
Any of the 40 million or so Americans who have ancestral or immediate family ties to Ireland certainly want both the US and Ireland to prosper. As I wrote in December, though, there has to be a better way than one-sided corporate inversions, one that is grand for both American and Irish bottom lines.
At the end of last year, Pfizer, in a $160-billion deal, announced that it was gobbling up Allergan Plc., a move designed to allow Pfizer to elude US taxes by shifting its corporate headquarters to Allergan’s Irish address. Sometimes, though, even in the murky realm of corporate inversions, reason reigns; a few weeks ago, the deal fell apart. The ripple effect, to quote a certain bellicose presidential candidate (more on him later), is “huge.”
In and around Boston, businessmen and businesswomen have been instrumental in many deals that have profited both sides of the Atlantic. Corporate inversions, however, mostly benefit CEOs and stockholders, who take to the wearing of the green by moving headquarters over to the Emerald Isle. Such Irish-American “alliances” come at the expense of thousands in the US who lose their jobs as their companies bail out of paying corporate taxes here. One can certainly argue that inversions are good business even as they constitute rank greed and display a cynical paucity of patriotism.
In a recent interview with CNBC’s “Squawk on the Street,” CEO Brent Saunders of Ireland-based Allergan whined that the Obama administration, through the US Treasury Department, had “targeted” his company’s deal with Pfizer. “It really looked like they did a very fine job of constructing a rule here – a temporary rule – to stop this deal, and obviously it was successful,” Saunders groused.
The “noxious” rule Saunders castigated was a just-crafted Treasury Department regulation that, according to CNBC, “will prevent so-called inversion deals – under which a US company moves its base to a country with a more favorable taxation environment. The regulation removed the tax benefits New York-based Pfizer had hoped to gain from the deal with Ireland’s Allergan.”
Laughably, Saunders huffed to “Squawk Box” that “Allergan had been blindsided by the Treasury’s announcement…For the rules to be changed after the game has started to be played is a bit un-American, but that’s the situation we’re in.”
No, Mr. Saunders, what is more than a bit “un-American” is for Pfizer and other American business behemoths to set up shop in other countries to avoid paying their fair share of US taxes. If, as the Supreme Court ruled in Citizens United, corporations are “people, too,” they, too, should have to file their taxes in America – just like the rest of “we the people.”
To no one’s surprise, presidential candidate Bernie Sanders – an avowed socialist whose unlikely push for the White House path is slowing to a crawl, allowing corporate American to breathe a little easier – said the Pfizer-Allergan merger “would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs.”
As the possibility of a Hillary Clinton-Donald Trump match-up looms larger, the Pfizers and Allergans are unlikely to find help from either candidate. Both have said they oppose inversion and favor restructuring corporate tax rates in the US. Of course, the ways in which either would attempt to do that are a chasm apart.
Clinton has asserted that she “is committed to cracking down on so-called ‘inversions, and believes we should reform our tax code to encourage investment in the US, rather than shipping earnings and jobs overseas.”
Late in 2015, Trump said, “These corporate inversions take capital and, more importantly, jobs offshore. We need leadership in Washington to get the tax code changed so companies will be coming to America, not looking for ways to leave.” To the ire of many in Ireland, The Donald recently told the Washington Post editorial board that “countries like Mexico and Ireland are outsmarting the US by giving multinationals incentives to move jobs overseas.” Not anymore.
A ‘Warning’ and a ‘Way Out’
It’s little secret that many in Ireland are tracking the US presidential race with varying degrees of amusement, bemusement, and head shaking. For what it’s worth, a recent Red C/Paddy Power poll that made the rounds of Irish media claimed that “some 81 percent of Irish people say the world would be a less safe place” if Trump were to become president.
Turning to Facebook, the Irish comedienne Clisare posted an anti-Trump video that went viral. Her piece, entitled “Dear America,” paints Trump as the proverbial “terrible boyfriend,” and she pleads with viewers to dump him before it’s too late. Her screed has already netted nearly two million views.
She opens the video with the following “warning” from a “concerned friend”: “I’ve just been chatting with all of the other countries, and we just really think that Donald is not right for you. We’d hoped that you’d come to this conclusion by yourself, but it’s looking like it needs to be said.”
To Americans who claim they will abandon America if Trump wins, the Belfast Telegraph reports that the good people of the island of Inishturk, off the Co. Mayo coast, has an offer. Mary Heanue, Inishturk’s development officer, says that the island could prove a haven for the “political refugees.” Although Inishturk’s population numbers a scant 60 or so souls, the site’s five-kilometer expanse might not prove enough real estate for disaffected American exiles in a Trumpian world.