According to this article in the New York Times, the chief executive officer of Pfizer is telling people that his company’s decision to buy a drug company in Dublin, Ireland, and move Pfizer’s headquarters to Ireland is good for the United States. His stated reasoning: the move will reduce Pfizer’s tax bill and give the company more money to invest in the United States and create more jobs.
This is laughable on the face of it. The sole reason that CEO Ian C. Read is pulling off this “inversion” is that he wants to cut his tax bill and make the company more profitable. That will send its stock price higher and doubtlessly increase his personal compensation.
We can debate whether the U.S. tax code is fair or not. Pfizer says it has been paying an effective annual income tax rate of 26 percent, which is less than I pay. I don’t believe Pfizer’s tax bill is so punitive that it has prevented the company from competing well in global markets.
The real question is what should be done to limit or prevent this inversion and others that may be in the pipeline. I think the feds should throw everything they have against Pfizer–the Internal Revenue Service should launch difficult audits, all federal research funding that may help Pfizer should be put on hold, universities should be told that Pfizer is a foreign company and they shouldn’t license technology to it, the tax treatment of all products moving in and out of the United States should be changed to make it more expensive for Pfizer, and on down the line. Then maybe Mr. Read and fellow CEOs will get the message.
