Will NJ become the first state to ban corporate tax inversions?
Some lawmakers in the New Jersey state legislature recently announced plans to remove incentives and cut contracts with U.S. companies that move offshore for tax purposes. According to a NorthJersey.com report, the proposed law changes are the direct result of Pfizer Inc.’s merger with Allergan PLC in Ireland in an attempt to lower its corporate tax rate.
The objective of the proposed legislation
The federal government recently announced changes to offshore disclosure and tax inversion laws to limit the corporate tax incentives. However, the NorthJersey.com report showed that New Jersey would be the first state in the country to remove these contracts and incentives for U.S. companies headquartered in their states. According to a NorthJersey.com interview with Sen. Shirley Turner, a Lawrenceville Democrat, this legislation would be an opposition to Gov. Chris Christie’s push to the federal government to lower corporate taxes.
“I want to send a strong message to Pfizer as well as any other corporate deserters looking to do the same thing,” Turner explained. “They are parasites living off of our taxpayers, and it’s not like they’re going bankrupt by any means.”
The background of the merger
The Allergan PLC and Pfizer Inc. merger is significant because the $160 billion partnership would create the largest corporate tax inversion in the world. As both companies have operating headquarters in New Jersey and Ireland, the merger makes sense from an operations standpoint, but it also represents a recent trend. Many U.S. companies have effectively completed tax inversions in Ireland in the last few years because of its 12.5 percent corporate tax rate. Currently, the corporate tax rate in the U.S. is 35 percent. While many U.S. companies pay far less than the nominal rate, it still makes Ireland a desirable destination for larger domestic companies.
Criticism
One of the most significant arguments against this newly proposed legislation at the state level is that the federal government has not made corporate tax inversions less profitable. Therefore, if the federal government fails to address the problems that contribute to higher numbers of offshore tax evasion for larger companies, states like New Jersey do not have the resources to keep those tax dollars. In a statement cited by NorthJersey.com, Joan Campion, a Pfizer spokesperson, agreed with Christie’s criticism of the proposed legislation because it only stimulates more corporate tax inversions.
“This legislation discourages investment in New Jersey,” Campion argued. “A reformed tax code that includes a territorial system would stimulate investment in the United States and allow American businesses to compete on a level playing field.”
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 […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
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.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
