The company, which is merging with Alliance Boots, will not move its headquarters overseas for billions in tax savings. President Obama called such maneuvers, known as corporate inversions, unpatriotic. View this image ' Mario Anzuoni / Reuters Walgreens today scrapped a controversial plan to relocate its headquarters to Europe to avoid paying billions in U.S. taxes over the next five years. The Deerfield, Illinois-based drugstore company, which was considering relabeling itself as Swiss or Britishin conjunction with its acquisition of Switzerlands Alliance Boots, has outraged lawmakers and Main Street over its proposed tax dodge. The tactic, which is perfectly legal, is known as a corporate inversion, and has become popular in the past few years, primarily among U.S. pharmaceutical giants. By technically moving a headquarters to a tax-friendly address outside the U.S. via a merger or acquisition, companies can wiggle out of paying taxes on profits earned overseas - which in this case, would impact earnings from Boots. Inversions also make it cheaper for companies to bring cash back into the U.S. - once theyre foreign, they evade taxes on using offshore cash hoards to fund U.S. investments,according to a column in the Wall Street Journal. Such maneuvers can help companies goose their stock prices through dividends and buybacks funded by low-taxed foreign cash, writes Edward Kleinbard, a law professor at the University of Southern California. So why not head to Ireland, the Netherlands, the U.K. or Switzerland? It obviously saves people a lot of tax payments, right? Rick Hans, divisional vice president of investor relations and finance at Walgreens, said of inversions in April. Weve never been a proponent to pay more taxes than we have to. We try to optimize that. It creates value, yes. If it sounds kind of shady, it is. President Obama said in a CNBC interviewlast month that if youre simply changing your mailing address in order to avoid paying taxes then youre really not doing right by the country and by the American people. Jon Stewartdescribed corporate inversions on The Daily Show this week as multibillion dollar corporations attempting to maximize profit through globalized tax evasion. People are paid to maximize profits, Obama told CNBC. But people are also paid to be good corporate citizens...and this kind of strategy, I think undermines peoples confidence in how companies are thinking about their responsibilities to the country as a whole.
The tax dodge isnt worth it, Walgreens says
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