Gregory D. Wasson, the chief executive of Walgreens which is based in Illinois, is strongly considering moving Walgreens headquarters to Switzerland. The move would merge Walgreens with Alliance Boots which is a European drugstore chain. The benefit of making the merger is all about saving money. Corporate taxes are less in Switzerland – and many other parts of the world – than they are in the United States – and in Illinois – according to a Yahoo! News report on Tuesday.
Wasson was praising Illinois for its tax breaks several years ago. But that was then, this is now. Previously, he said that Walgreens was a company recommitted to serving as an economic anchor for northeastern Illinois. The state had given Walgreens $46 million in corporate income tax credits over a period of ten years. That was in exchange for a pledge from the firm to create some 500 jobs and to invest in upgrading the company’s offices. Additionally, Illinois gave Walgreens $625,000 for training and $875,00 in additional tax incentives. But since those luxurious deals with Illinois, Wasson has changed his tune.
Wasson is not hiding the fact that Walgreens is attempting to greatly reduce its tax bill. The term for what Wasson is thinking of doing is called inversion. Inversion is becoming more and more popular in business, according to Bloomberg Businessweek. The reason is simple. Taxes are reduced when a United States firm merges with a foreign rival. In spite of the foreign reincorporation of the company, however, the business continues to do business and thrive in the United States.
The reaction to the notion that Walgreens may be taking its headquarters out of Illinois and that it may merge with a Swiss company has been negative, as one can imagine. The associate director of Change to Win Retail Initiatives, Neil Geiser, said that it is unconscionable that Walgreens is even considering this tax dodge, especially in light of the billions of dollars the firm makes from United States taxpayers every year. According to the report, Walgreens gets almost a quarter of its $72 billion in revenue directly from the U.S. government via its $16.7 billion from Medicare and Medicaid in 2013.
Additionally, the executive director of Americans for Tax Fairness, said that the contemplation b Wasson is deeply unpatriotic and unfair – if it ultimately decides to move offshore while continuing to make its money right here in the United States while the U.S. picks up the tab for its tax avoidance. The cost to United States taxpayers would be about $4 billion over the next five years if they move out of the country. Americans for Tax Fairness says that the company’s tax rate would be cut from approximately 31 percent to just 20 percent if it should merge with Alliance Boots. Again, it’s about a business making decisions based on saving money via taxes which are higher in the United States than they are elsewhere for a business.