The Pfizer-Allergan Merger Uses a Tax Trick That Lets US Companies Stash Billions Overseas


Earlier today, the pharmaceutical giants Pfizer and Allergan announced a merger worth $160 billion. There’s a wrinkle to this deal between the makers of Viagra and Botox: It’s being facilitated by a controversial tax trick known as an inversion, which lets American companies move their headquarters abroad, avoiding the IRS while keeping executives stateside. If it goes through, the Pfizer-Allergan agreement will be the largest tax inversion ever.

Hillary Clinton has already criticized the pharma deal and has called for “cracking down on inversions that erode our tax base.” In the past, President Barack Obama has slammed inversions as unpatriotic. His administration and congressional Democrats estimate that tax inversions will result in nearly $20 billion in lost taxes through 2024.

Inversions have been around since the early ’80s, when a tax lawyer masterminded a move known as the “Panama Scoot”. Since then, more than 100 companies have renounced their American citizenship. Here’s where they went:

And inversions are just one of many ways US companies stash earnings abroad. Between 2008 and 2013, American firms had more than $2.1 trillion in profits held overseas—that’s as much as $500 billion in unpaid taxes.

 

THANK YOU.

We recently wrapped up the crowdfunding campaign for our ambitious Mother Jones Corruption Project, and it was a smashing success. About 10,364 readers pitched in with donations averaging $45, and together they contributed about $467,374 toward our $500,000 goal.

That's amazing. We still have donations from letters we sent in the mail coming back to us, so we're on pace to hit—if not exceed—that goal. Thank you so much. We'll keep you posted here as the project ramps up, and you can join the hundreds of readers who have alerted us to corruption to dig into.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.