The (New London) Day (Conn.), Feb. 25:
Now there is another reason to detest Pfizer Inc.’s decision to renounce its U.S. corporate citizenship to avoid U.S. taxes. As reported recently by Day Staff Writer Lee Howard, due to Pfizer’s tax-avoiding merger those who have held on most loyally to Pfizer stock – many of them former employees – are about to get hit with huge tax bills.
Of course, loyalty has not played any role in this business move.
Starting in a factory in Brooklyn, N.Y., in 1849, Pfizer Inc. built its pharmaceutical global empire in the United States, thanks to American labor, markets and ingenuity. Last November, however, Pfizer opted for maximizing profit over practicing patriotism, announcing a $160 billion merger with the Irishbased Allergan, which built its own success on that vital product Botox.
Oh, technically, the much smaller Allergan is buying Pfizer. The headquarters of the new merged company will be in Dublin, Ireland. Corporate lawyers, to slash Pfizer’s corporate tax rate to the 17 percent charged in Ireland, carefully orchestrated the merger details. The U.S. corporate tax rate is 35 percent, though using various tax breaks Pfizer has paid an effective rate of 25 percent or less.
But this “inversion” will force stockholders to exchange the company’s American-based stock for that of the new Irish-based drug firm, Pfizer plc. Investors in high tax brackets will have to pay a 20 percent federal capital-gains tax. When you add in the stock’s appreciation, the hit could be 30 percent or more.
Most vulnerable are former employees who decades ago took advantage of lucrative stock options to buy stocks for just a few dollars a share, then loyally hung onto their Pfizer shares when they tanked, dipping under $10 per share in 2009. The stock is now trading in the range of $30. The big appreciation will mean big taxes.
Why are so many corporations – more than 80 and counting – bailing on America? They say the corporate tax rate of 35 percent in the United States is excessive. In truth, few corporations pay that much. And the U.S. corporate tax rate helps pay for necessary infrastructure, for a regulatory system to protect fair commerce, and for the world’s largest military to allow unfettered global trade.
Dropping the rate would only set off a rate war with other nations dropping their rates to try to placate corporate greed.
The better step is that proposed by Democratic presidential candidate Sen. Bernie Sanders of Vermont; stop inversions by making it illegal for corporations to buy smaller foreign businesses for the purpose of moving their tax domicile and dodging U.S. taxes.
The Caledonian Record (Vt.), Feb. 24:
Gallup released a poll last week that measured trust in state governments. The state governments inspiring the least trust were Illinois, Rhode Island, Connecticut, New Jersey, and Louisiana. The most trusted state governments were North Dakota, Wyoming, Nebraska, Montana and South Dakota.
Interestingly the least trusted governments all appear in traditional nanny states. All five of the most trusted governments are in states with Republican-controlled legislatures and executives.
The poll shows that, on average, “the 22 states that have a Republican governor and GOP majority in both houses of the legislature (60%) than in the seven states that have a Democratic governor and Democratic majority in both houses (52%).”
The takeaway, though, is not “you can’t trust Democrats.” Rather, it’s that people in small states and rich states tend to have rosier outlooks (The fact that GOP controlled states do better economically is fodder for another day).
No big surprises there. What stood out for us is that Vermont ranks 19th on the list… with 60- percent of respondents expressing trust in their state government.
Apparently they haven’t heard of Vermont Health Connect; the education funding crisis; their failed, billion dollar Human Services department; explosive government spending (triple the growth, each year, of the state’s economy); the “catch-and-release” policy from the Department of Corrections; and/or the pie-in-the sky renewable energy policy that jams wind towers down our throats and dramatically increases the cost of power in a state already suffering the nation’s highest cost.
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