By Mike Matejka
Amidst all the news, there was a recent business development that exemplifies why Americans are angry about taxes.
You might not know the drug companies Pfizer and Allegran, but I bet you’ve heard of Lipitor, Viagra and Botox. Pfizer and Allegran want to merge — It’s a $160 billion proposition.
Are they doing this to combine their research labs to help cure diseases? Are drug prices going to be reduced as these two giants merge? No, their motivation is very simple – tax evasion.
Allegran incorporated in Ireland to pay lower taxes. By merging with Allegran, now Pfizer can pay lower taxes.
Is Pfizer going to relocate to the Emerald Island? No, it will remain in New York. This is simply a paper move, what Wall Street calls an “Inversion.”
Inversion is where companies create a corporate shell to avoid taxes. Ireland is popular, but even more so are the sunny beaches of the Cayman Islands and Bermuda. In those islands are corporate subsidiaries for Apple, IBM, PepsiCo and Citigroup. 64 percent of the Fortune 500 have a tropical tax haven on these Caribbean Islands.
It’s time these companies pay their fair share. These drug companies receive federal research dollars to develop new drugs – paid for by taxes. They depend upon American tax payer funded highways and urban transit systems. Tax funded public schools educate their children and our military protects them.
With Illinois in financial trouble, perhaps Governor Rauner and the Democratic leadership should do what Oregon and Montana have done. They tax all corporate earnings by companies using tax havens. Montana collected $2.7 million in 2010, thanks to this state law.
Yes, we need tax reform and a more transparent system in this country. There are enough loopholes for the corporate giants. While their money filters through sunny Caribbean shores, we here in wintry central Illinois are left holding the bag.
Mike Matejka is the Governmental Affairs director for the Great Plains Laborers District Council, covering 11,000 union Laborers in northern Illinois, Iowa, Nebraska and South Dakota. He lives in Bloomington with his wife and daughter and their two dogs. He served on the Bloomington City Council for 18 years, is a past president of the McLean County Historical Society and Vice-President of the Illinois Labor History Society.
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