I work in the news business — but only part-time. I write news stories that anchors or morning show sidekicks use for content. It’s a job that I rather like when I get to do it, but it can be tough to tell a complex story in four lines of copy. But I guess that’s what blogs are for, right?
So, you’ve probably seen the headlines stating Walgreen’s won’t be shedding their identity as a U.S. corporation by setting up their HQ in Switzerland, right? No? Well here’s a visual.
Companies do this so they can get a huge tax break. Well, Walgreen’s didn’t bow to Wall Street pressure and jump on the tax inversion bandwagon. So, what did the next wave of headlines say?
Yeah, you keep you business in the U.S. and investors dump your stock and run for the exits because you, you foolish corporation, chose America.
So what is all this tax inversion business? Well, according to Investopedia:
Corporate inversion is one of the many strategies companies employ to reduce their tax burden. One way that a company can re-incorporate abroad is by having a foreign company buy its current operations. Assets are then owned by the foreign company, and the old incorporation is dissolved. If it [the company] incorporates abroad, it can bypass having to pay higher U.S. taxes on income that is not generated in the United States.
Corporate inversion is not considered tax evasion as long as it doesn’t involve misrepresenting information on a tax return or undertaking illegal activities to hide profits.
But…some companies do misrepresent information and undertake illegal activities, and are never fined. Why? Because they police themselves. Yes, set the market free of regulation, and the inherent virtue of its participants will bubble up to self-regulate their behavior. I know, you’re laughing yourself silly and almost peeing your pants because what I just wrote is a joke, right? The market polices itself and follows the rules? Ha, bloody, ha.
So, the news that Walgreen’s stock fell something like 14 points was written up by business reporters using the angle that keeping the company in the U.S. was bad for business because investors dumped Walgreen’s stock. So the people who don’t “choose America” are punishing Walgreen’s for not going to tax inversion route. But you know what can be done? Those who have the ability should buy Walgreen stock and hold on to is for as long as they are a U.S. company. If enough people do that, it’ll tell “the market” that some investors like the fact that Walgreen’s aren’t fleeing the country for tax reasons.
I suppose that’s the thing that gets me steaming about some companies. They don’t want to pay taxes, livable wages, or good benefits, but want all the perks that come with being part of the U.S. — even if they do a tax/corporate inversion. If their interests are threatened abroad, I’m sure they would lobby the government for help. And because said corporations give so much money to political campaigns, politicians are more than willing to offer help — at taxpayer’s expense, naturally.
