American drug companies AbbVie and Mylan won’t be American long if all goes as planned. Both are involved in international mergers (worth $53.6 billion and $5.3 billion, respectively) with the ultimate goal of moving their home bases abroad.
It’s a move called an inversion, when companies move headquarters outside of the U.S. to avoid American taxes. And many large American companies are doing it or at least considering it.
“What’s going on now is a feeding frenzy,” says University of California, Berkeley law professor Steven Davidoff Solomon. “Every investment banker now has a slide deck that they’re taking to any possible company and saying, ‘you have to do a corporate inversion now, because if you don’t, your competitors will.’”
The math is simple, but international mergers rarely are. Dealing with legal requirements of a new country can be complex and there are invariably cultural issues to handle. There’s also the potential image hit.
“To shift their profits overseas, to some seems unpatriotic,” says Steve Rosenthal of the Urban-Brookings Tax Policy Center. “That’s a real public relations concern.”
Members of Congress are stomping their feet about the current wave of corporate runaways, but partisan gridlock means they’re unlikely to change anything soon. There’s an ongoing debate about how to tax corporations here fairly, but more and more companies are basically exiting that argument, and the country itself.
If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.
Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.
When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.
make public service
Thank you for doing your part!