Walgreens (Image by Mike Mozart Flickr CC)
The right wing has cut billions out of the Supplemental Nutrition Assistance Program, claiming that our country can’t afford to feed hungry children. But at the same time, some of our country’s biggest recipients of federal aid – corporations such as Walgreens – are taking advantage of tax loopholes to avoid paying their fair share in taxes.
For decades we have watched our jobs be shipped offshore in corporate restructuring. They take the jobs from hard working Americans and send them to China or India to boost their corporate profit margins. However there is a new trend in Corporate America that is sweeping across the nation. It is called “inversion.”
Inversion is where an American company buys a foreign company and the renounces their US citizenship to avoid paying US taxes. The best part is that it is all done on paper, so they do not even have to pack a box from their corporate headquarters.
Walgreens started over 100 years ago in the small town of Galesburg, Illinois and has grown into the nations largest pharmacy chain, with revenue in the billions. Walgreens, which is still based in Illinois, announced that they are considering renouncing their “corporate citizenship” to move to Switzerland, a tax haven for corporations.
By renouncing their citizenship, Walgreens will avoid paying $4 billion dollars in corporate taxes annually. This is treasonous when you consider that one-quarter, $72 billion dollars, of Walgreens annual revenue comes from taxpayers in the form of Medicare and Medicaid payments. Walgreens is happy to take the taxpayers’ money but do not feel they should have to pay their fair share.
“Much of Walgreen’s financial success was built on programs and infrastructure provided by the U.S. government and paid for by U.S. taxpayers,” said Senator Dick Durbin (D-IL) in a letter to the Walgreens CEO and Board of Directors. “If you and Walgreen’s board of directors decide to invert to avoid U.S. taxes, you will be turning your backs on the very people that have allowed Walgreens to thrive and prosper.”
“Inversion schemes are bad for shareholders and bad for America,” said LIUNA General President Terry O’Sullivan. “They erode tax money that should be used for support U.S. infrastructure, education, national defense and other crucial programs. They potentially tarnish the reputation – and thus the value – of companies. And they can make it more difficult for shareholders to hold a company, its officers or directors accountable.”
LIUNA used their pension fund to send a letter to the Walgreens board of directors to institute a policy barring inversions.
“We need to start demanding a little more patriotism from these so-called American corporations,” said Richard Trumka, President of the AFL-CIO. “If they want to keep benefiting from everything our great country has to offer, they need to start showing a little more loyalty to the people who live and work in America. And they need to stop threatening to desert the United States and stop paying their taxes altogether unless we give in to their demands.”
Inversions are not new, corporations have been offshoring their corporate citizenship to avoid paying taxes for many years. Thanks to these corporate tax loopholes, 26 profitable corporations including Verizon and GE, paid zero in income taxes from 2008-2012. The most egregious part of this is that some of these highly profitable corporations actually got rebates and refunds from the federal government making their effective tax rate -10%.
We need to close these corporate loopholes that are letting billions of dollars slip through our fingers. It is also sickening to hear how the corporate tax rate is too high, when many of these highly profitable corporations pay less percentage wise than the average American.
Why does this type of activity not outrage more small business owners? These main street shops do not have the ability to invert to avoid paying their taxes. When will Congress start working for the people on Main Street instead of the people on Wall Street?
“Key members of Congress have introduced legislation based on Obama’s plan. Sen. Carl Levin (D-MI), Chairman of a subcommittee that has investigated tax avoidance by Apple and other corporations, has introduced the Stop Corporate Inversions Act of 2014 (S. 2360). Rep. Sander Levin (D-MI) has introduced a companion bill in the House of Representatives (H.R. 4679) that would raise $19.5 billion over 10 years,” reported the Americans for Tax Fairness.
“The President, Senator Wyden, Senator Levin and Representative Levin have all proposed solutions to plug the loophole and the Senate Finance Committee is holding a hearing on the issue today. Let’s get it done,” concluded Trumka.
Are we as Americans going to accept this treasonous activity from our nations largest pharmacy chain? We must close these corporate loopholes that allow corporations to skip out on paying their fair share.
Walgreens backs down on plan to invert. Read more here.