The Problem of Corporate Inversions: The Right and Wrong Approaches for Congress

Source: Citizens for Tax Justice, Fact Sheet, May 14, 2014

Background:
Corporate “inversion,” in which an American corporation reincorporates itself as a “foreign” company to avoid U.S. taxes, is in the news again. In 2004, Congress enacted a bipartisan law to prevent inversions, but a gaping loophole allows corporations to skirt this law by acquiring a foreign company.

This is what the pharmaceutical giant Pfizer hopes to do if its bid to acquire AstraZeneca, a U.K. company, is successful. A group of hedge funds that own stock in Walgreen Co. want the company to acquire a larger stake in Switzerland-based Alliance Boots for the same reason.