Sunday, July 17, 2016

Pfizer tax scam cancelled by Obama administration's new rules on tax inversion

April 4, 2016

White House limits corporate inversions

I love the innovativeness of capitalism. If there is a buck to be made or a tax to be avoided, someone somewhere is working on it. The problem is these schemes do not contribute to the over health or wealth of society.  In fact they cheat the larger society and undermine collective efforts to solve societies problems.  Some might call this selfish, me first attitude as unpatriotic.  

Inversion is process of buying legal entity status in a low tax jurisdiction and then funneling revenues though that entity to reduce a corporation's tax rate. The reduced taxes cut into government tax revenues. This shift of revenue recognition often pits one tax location against another in a race to the bottom.  Ireland, Netherlands, Switzerland, Luxumboug and the UK are well know tax havens.

So capitalism a trade off. We take the good of our system with the bad.  We try and balance the two so that no gets hurt too bad. But every now then the balance in our country tips too much toward business and government must step in an level the playing field.

That's exactly what Obama did during Pfizer's recent attempt to buy Allergan.  The merger made no business sense.

Note: at a previous company I worked on process to show profits in the lowest tax jurisdictions regardless of where a product was made. The processes had little real economic value. The processes continue today.

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