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Pfizer’s Ploy and the Porous Tax Laws

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This NYT editorial says the Pfizer bid to acquire Astra Zeneca is an inversion, a tax maneouvre using openings in U.S. and British tax laws that allows an American company to incorporate in London by acquiring a British company. In effect Pfizer beomes a subsidiary of the British company. This reduces taxes owed even though business takes place at Pfizer as before. NYT says 25 companies have adopted inversions since 2008. The top corporate tax rate in Britain at 20% is lower thant the top rate of 35% in the U.S. Additional tax maoeuvres could make it easier for income shifting to tax havens, and make it possible to free up cash held in foreign countries without the need to first repatriate it to the U.S. The problem is that such maneouvres are taking place at a time of large U.S. deficits, and deep cuts in public services and government investment in R&D, infrastructure, education, that would lead to future economic growth.

Public perceptions of Pfizer's strategies in pursuing the acquisition of Astra-Zeneca- tax avoidance at a time of large government deficits and cuts in public services

05/23/2014

For acquisitions to succeed and be a win-win for both companies there have to be ways in which the productivity of capital can be increased through creative endeavors, new products, and savings, beyond maneouvres around tax laws. An editorial in the NYT makes this point.

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