Clinton condemns Pfizer merger with Allergan as ‘just offensive’

Democratic presidential favourite Hillary Clinton has called the recent Irish tax-driven merger of US drug company Pfizer with Dublin-based Allergan and other corporate inversion deals "just offensive."

At a campaign event, Mrs Clinton condemned Pfizer’s €150 billion merger with Allergan in a“corporate inversion”, a transaction motivated by the US company’s desire to avail of the lower Irish corporate tax rate and avoid higher American taxes.

In a fact sheet on proposed tax changes, Mrs Clinton said that, without immediate action, inversions such as the recent deal by which Pfizer is merging with Allergan, and “becoming ‘Irish’ for the purpose of lowering its tax bill”, would “continue to erode the US tax base”.

She said that it was time for Republicans in Congress "to stop thwarting action and stop using tax games as a method of tilting the tax code even further toward the largest multinational corporations".

Speaking to supporters in Iowa, the first state to pick the parties' presidential nominees next year, she vowed to end corporate inversions, for which low-tax Ireland is a favourite destination.

Gaming the system

“The manoeuvres powerful corporations are using to game the system and leave everyday taxpayers holding the bag are just offensive,” she said. “All told, inversions by Pfizer and other companies, plus related loopholes, will cost American taxpayers more than $80 billion in revenue over the next 10 years. That’s money we should be investing here at home.”

The former secretary of state said the issue was “not only about fairness; this is about patriotism . . . I want to raise the cost to corporations that try to get out of paying their fair share.”

In a bid to stop corporate inversions, a practice of which Ireland is a major beneficiary, with its 12.5 per cent corporate tax rate, the likely Democratic nominee says that, if elected president, she would impose an “exit tax” on companies that swap their American legal and tax addresses for a foreign location.

Mrs Clinton aims to crack down on “earnings stripping” by companies moving profits overseas to countries with lower tax rates, such as Ireland, and maximising high deductions by moving debt to the US to reduce their tax bills under the US’s 35 per cent rate.

Another proposal would curb inversions by requiring a foreign company targeted by a US firm to maintain a 50 per cent shareholding in the merged entity, up from the current level of 20 per cent.

Exit tax

Her exit tax would apply to untaxed overseas earnings of companies relinquishing their US residence where they try to avoid the 50 per cent threshold through tax planning.

The Obama administration has attempted to limit corporate inversions through new treasury rules, though transactions can only be fully blocked if Congress passes legislation.

President Obama has accused US companies of being unpatriotic and singled out Ireland last year, criticising American firms for becoming “magically an Irish company” through mergers.