
Decentralized Social Media Finds A Foothold
Companies may face too many options for brand messaging.
MANAGEMENT | TAX PLANNING
Gregory Wasson, president and CEO of Walgreen, says the company “concluded it was not in the best interest of shareholders to attempt to re-domicile outside the US” to cut its tax bill. Nonetheless, the Illinois-based pharmacy chain decided to go ahead with its plan to acquire the 55% stake it did not already own in Alliance Boots of the UK.
The decision came as president Barack Obama lambasted US companies that move offshore to save on taxes, labeling them corporate deserters. “I don’t care if it’s legal. It’s wrong,” the president said. “You shouldn’t get to call yourself an American company only when you want a handout from the American taxpayers.” The administration is looking for ways to stop such deals without waiting for Congress to act.
Walgreen said it was “mindful of the ongoing public reaction to a potential inversion,” noting that “a major portion of its revenues derived from government-funded reimbursement programs.”
Nigel Green, CEO of deVere Group, an independent financial advisory firm, believes political involvement sets a dangerous precedent. “The political posturing and ill-conceived meddling in business could act as a deterrent to future domestic and foreign investment, as investors could be forced into paying more tax than they are legally required to,” he says, in order to suit a political agenda.
“It is right and appropriate that companies such as Walgreen, among others, consider all the legal options available to them to mitigate their tax bills,” Green says. “Indeed, firms have an obligation to do this for their shareholders.”
The vast majority of US companies would like to remain headquartered in the US, but there is mounting pressure on them to consider lower-tax destinations, Green says. The time has come to reduce the 35% US corporate tax rate, he says.
Meanwhile, other pharmaceutical companies, including AbbVie and Mylan, have announced deals in recent months to move their corporate headquarters overseas.