Walgreens Backs down From Tax Inversion Plan!

Walgreens Co announced today that it won’t be going through with the potential merge Switzerland-based company, Alliance Boots. Bryce Covert of “thinkprogress” has reported that the completion of this deal which is commonly coined as an “inversion”, would have shifted the company headquarters overseas to avoid paying U.S. taxes. Although it will still go through with buying all of Alliance Boots’ stock shares, Walgreens will still stay based in the Chicago area. The company’s decision not to move its headquarters overseas through a merger is the third major deal to collapse in recent months. Companies have come under increased scrutiny for these “Inversions” from Congress all the way up to the Commander in Chief, Barack Obama. As a matter of fact, the U.S. Treasury Department announced today that it will be researching on ways to limit major companies’ abilities to execute these inversion deals as well as ways to reduce the tax benefits of such moves.

Walgreens CEO Greg Wasson states that the company “could not arrive at a structure that provided the company and our board with the requisite level of confidence that a transaction of this significance would need to withstand extensive IRS review and scrutiny.” A Walgreens spokesman also made a statement, saying the company was “mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs.”

It is believed that over 76 companies have done these inversion deals going back to the mid-80’s. However, 38 of these companies have executed this type of diversion since the recession in 2008. Out of the 38 companies, a dozen companies have made the move this year alone! It is reported that these deals are costing the country between $30 billion and $90 billion a year in tax revenue. Should the American people be up in arms about this? Is the company at fault for trying to execute a smart business move by lowering their taxes, or are they obligated to pay those taxes because they became a billion dollar corporation on American soil? Let us know what you think!

–JRC