It's not just Walgreens: The absurd measures corporations will take to dodge taxes

The popular "inversion" scam allows American institutions to game the system. It's unethical -- and unpatriotic

Published July 10, 2014 11:15AM (EDT)

This article originally appeared on AlterNet.

AlterNet How would you react if one of your neighbors announced that while he obviously benefits from having clean water, highways, Medicare, police protection, parks, schools, and other public services, he was no longer going to pay his part of the taxes that make them available?

And what if this neighbor also said he was renouncing his American citizenship to become a citizen of Switzerland, because he could pay less taxes there? Not that he was actually moving to that cold country, mind you -- no, no, he'd still be living right here in the good ol' USA, still benefitting from all those public services that taxpayers like you and I provide.

Surely, you think, this has to be a joke. A person can't really do this, can they? No, of course a "real" person could not get away with this You see, corporations are funny creatures. For example, they don't want to pay their share of America's tax bill, but then they're first in line demanding subsidies, grants and other special handouts from America's government to pad their financial bottom line.

That's hilarious hypocrisy -- but it's no laughing matter, since it means you and I have to pay more to cover their tax avoidance, while also seeing our public money siphoned out of the programs that we need into the pockets of corporate elites, who most often use the funds against the public interest.

Corporate tax dodging has become both rampant and ridiculous. Take an increasingly popular scam called "inversion," which is nothing but a perversion of tax law, business ethics and common decency. It works like this: By merging with a corporation based in a country with lax tax laws, a U.S. corporation can reincorporate as a citizen of that country and shift its tax obligations there, even though all or most of its profits are made from sales in the U.S-of-A.

For example, Gregory Wasson of Long Grove, Illinois, announced that he has plans for all of the above. Gregory isn't my neighbor, but he sounds like a "real" person. So how is he getting away with this scam, you ask? While Greg is not personally my neighbor, or yours, the corporation he heads might be. Wasson is CEO of America's largest drugstore chain, Walgreens Corporation, the sprawling, $72-billion-a-year behemoth that is in all 50 states and has stores in thousands of neighborhoods all across the country.

But Greg no longer wants Walgreens to be American, so he is presently trying to use this tax-shifting film-flam by merging with a Swiss-based chain. Rather than paying the roughly $800 million a year tax tab it owes to our nation, Walgreens would pay maybe $600 million to Switzerland.

Of course, the stores will not move to Switzerland. Wasson fully intends to keep extracting profits from our neighborhoods and for Walgreens to keep benefiting from all the public services that America provides, from police to infrastructure. Through inversion -- a reversal of the natural order -- the giant corporation would continue to enjoy enormous profits and benefits it gets from the United States, but pay Swiss taxes. So you and I are left picking up Walgreens' tab, and the Swiss gain 600 million in tax dollars for services and infrastructure they did not provide -- unless you count being a tax shelter as service and infrastructure.

Walgreens' crass tax ploy would also give it a competitive advantage over other American drug stores that aren't so greedy as to abandon America and, as Sen. Dick Durbin put it, "move their headquarters for a tax break."

Oh, one more thing: About a fourth of Walgreens' annual income is derived from -- guess who? -- our U.S. government. Yes, our very government that the people of Wasson & Co. say they no longer want to help support. The unpatriotic drugstore ingrate drew nearly $17 billion last year from Medicare and Medicaid payments provided by Uncle Sam.

If Walgreens doesn't want to support public programs like these, the programs should not be supporting Walgreens.


By Jim Hightower

Jim Hightower's most recent book is "Let's Stop Beating Around the Bush." He produces a monthly newsletter, The Hightower Lowdown, and a syndicated daily radio commentary.

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