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Pfizer-Allergan Merger- Natalie Hedden

A sign is seen at the Pfizer manufacturing plant in Newbridge, County Kildare, Ireland, November 12, 2015. REUTERS/Tom Bergin
A sign is seen at the Pfizer manufacturing plant in Newbridge, County Kildare, Ireland, November 12, 2015. REUTERS/Tom Bergin

According to two recent New York Times articles, Boards of Directors at Pfizer and Allergan spent Sunday working out the kinks of a merger between the two companies, resulting in a $150 billion deal, set to be voted on on Monday. This merger would create one of the largest pharmaceutical mergers ever to exist–Pfizer capital is valued at $205 billion and Allergan’s is $124 billion . Why Allergan? It’s stationed in Dublin, Ireland. This means that if Pfizer can operate in Ireland it can avoid paying taxes at the American rate. This is controversial because of a new law issued Thursday  by the U.S. Treasury and IRS that discourages American companies from committing “corporate inversion”, which is essentially relocating headquarters abroad by purchasing smaller, foreign competitors to reduce their tax rate. The law would make it difficult to avoid US tax rates if an American company moves operations abroad.  Pfizer is aware of this rule and has made Allergen the legal buyer. However, Pfizer would still be the acquirer of the purchases made by the merged company. Because the Treasury has little judicial or legislative power, the Secretary of the Treasury, Jacob Lew, is calling on Congress to take action: “Only legislation can decisively stop inversions.” Orrin Hatch (R-UT) is the chairman of the Senate Finance Committee. On Thursday he state that “A pure anti-inversion approach may have the unintended consequence of encouraging more acquisitions of United States companies by foreign-owned firms.”

I think this is completely wrong. Pfizer’s actions beg the question: Can’t huge corporations like Pfizer afford to pay back the economy and infrastructure that gave birth to them? I don’t understand why Pfizer should need to evade tax payments considering how much money the company makes each year off of American citizens who, individually, cannot afford to commit tax evasion. Pfizer’s actions will allow the company to save a lot of money, increasing their company’s value even more which poses the threat of an eventual monopoly on the industry. This issue connects to the class because business and society belong to an interactive system. One should never take advantage of or abuse the other. Pfizer’s attempts to escape paying the taxes they rightfully owe is unfair to the citizens who would benefit from those tax payments. Every week or two weeks, employed citizen’s receive paychecks that are much less than they actually earn because of all the money that goes into taxes, which are then used to better society. Pfizer is a giant corporation whose tax payments are very important to those tax systems. Pfizer doesn’t deserve to avoid paying taxes because that evasion is unjustly benefitting only the business and not society as a whole, thereby destroying the interactive system in place.

 

http://www.nytimes.com/2015/11/23/business/dealbook/pfizer-and-allergan-near-150-billion-merger-deal.html?&moduleDetail=section-news-0&action=click&contentCollection=Business%20Day&region=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=article&_r=0

http://www.nytimes.com/2015/11/20/business/dealbook/treasury-and-irs-propose-rules-to-curb-corporate-relocations-for-tax-reasons.html?ribbon-ad-idx=2&rref=business/dealbook&module=Ribbon&version=context&region=Header&action=click&contentCollection=DealBook&pgtype=article

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