CHN: Treasury Department Cracks Down on Corporate Tax Dodging

Advocates applauded guidelines issued by the U.S. Treasury Department on April 4 that caused the collapse of the drug company Pfizer’s merger with fellow drug firm Allergan, which would have allowed Pfizer to dodge a $35 billion U.S. tax bill. The guidelines reduce the benefits and limit the number of companies that use the tax inversion loophole. The day after the guidelines were issued, Pfizer and Allergan announced the termination of their merger, saying that Treasury’s proposed new rules drove the decision. Americans for Tax Fairness (ATF), of which CHN is a member, had called for strong executive action to prevent Pfizer from being able to pull off the $35 billion tax dodge, noting that our country could use that money to pay for human needs. For more information on the Treasury Department’s move and ATF’s work, see our related blog post. CQ is reporting that some Senate Democrats are saying they want legislation to expand and make permanent the rules against corporate inversions, which allows companies to lower their tax bill by buying or merging with a company with headquarters (often on paper only) in another country.

tax policy