James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
Possible Pfizer inversion raises questions among lawmakers
Author: James F. McDonough
Date: May 16, 2014
Key Contacts
Back
U.S.-based pharmaceutical company Pfizer has offered to buy British competitor AstraZeneca for $99 billion, according to The New York Times. In buying the company and moving its headquarters to Britain, Pfizer could avoid U.S. corporate tax liability on its income outside of the the country. Currently, the company pays an effective tax rate of approximately 27 percent – much higher than the British corporate income tax rate of 21 percent.
There are at least 50 American companies that have undergone the controversial inversion process, in which a U.S. company merges with a smaller foreign company in order to enjoy lower tax rates, almost half of which have occurred in the last two years, according to the news source. If successful, however, Pfizer would be the largest and best-known company to do so.
“Pfizer is the Coca-Cola of health care. It’s as American as apple pie,” Mark Schoenebaum, an analyst with the ISI Group, told the news source. “If there is a deal that is going to start a real dialogue in Washington, it might be a company like this.”
Such a move would result in the loss of tax income from the company for the U.S. government, which amounted to about $2.87 billion last year, Reuters reported. This has sparked serious concern from American lawmakers on both sides of the aisle.
“This further demonstrates the urgency for tax reform,” a spokeswoman for Democratic Sen. Ron Wyden, chairman of the tax-writing U.S. Senate Finance Committee, told the news source. “Now is the time to undertake comprehensive reform to ensure our country stays competitive on a global stage and continues to be the best place for corporate investment.”
The Obama administration included a proposal in its 2015 budget to more seriously regulate deals like the one that Pfizer is attempting, according to Reuters. With Congress deadlocked on tax issues, however, the proposal is unlikely to gain any real ground.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
Crypto Compliance: A Comprehensive Guide
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.