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Tell President Obama: Block Pfizer’s corporate inversion tax dodge

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Petition to President Obama:

"Stop Pfizer and other companies from dodging billions in taxes owed to the American people. Close the 'hopscotch loans' loophole and use your administration’s full legal authority to crack down on corporate inversions."

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    Tell President Obama: Block Pfizer’s corporate inversion tax dodge

    As Americans get ready for the deadline to pay their taxes, one of the most profitable companies in America is plotting a way to dodge billions in their taxes.

    The pharmaceutical giant Pfizer recently announced that it would be merging with Allergan, a tiny European rival, in a plan designed to move Pfizer’s tax address offshore while it continues to do business here in the U.S.A.1 Called a “corporate tax inversion,” it would allow Pfizer to dodge taxes while robbing Americans of revenue that could fund infrastructure or education.2

    The roughly $35 billion in taxes that Pfizer will dodge could pay for five years of preschool for all 4-year-olds, or community college tuition for nearly 9 million students.3 The good news is that the Obama administration can block Pfizer’s shady dealings by closing loopholes in the tax law – but only if they act fast, before the rules around tax inversions are finalized and the Pfizer-Allergan merger is complete.

    Tell President Obama: Block Pfizer’s corporate inversion tax dodge.

    Pfizer already has nearly $150 billion parked offshore, dodging taxes entirely. It pays an effective tax rate of around 7.5 percent, thanks to a corporate tax code shredded with loopholes – far lower than what ordinary Americans and small businesses pay. Right now, Pfizer would need to pay taxes on that $150 billion if it tried to bring the money back into the U.S. But instead, it plans to change its address to Ireland, loan money from its foreign subsidiaries to its new foreign parent company, Allergan, and then distribute that money to shareholders – skipping right over U.S. taxes.4

    This scam is called a “hopscotch” loan, and the Treasury Department has tried to stop it before. But the current rules include a glaring loophole. Hopscotch loans only have tax benefits if the U.S. company owns more than 60 percent of a foreign corporation – and Pfizer carefully structured the deal to own only 56 percent of Allergan. In other words, Pfizer is taking advantage of the fine print in order to transfer money between bank accounts and dodge paying its fair share of taxes. It isn’t even planning to change its business model, keeping its headquarters, employees, and customers in the U.S.5

    Stopping this scam is a simple matter of fixing the fine print. The Treasury Department will finalize its rules for tax inversions in the next few weeks. The Pfizer - Allergan merger will be complete this spring, and other similar mergers are taking Pfizer as a model.6 There are only a few weeks left to raise the stakes and pressure the Obama administration into taking a hard stand against tax-dodging schemes like the hopscotch loophole.

    Tell President Obama: Block Pfizer’s corporate inversion tax dodge.

    Pfizer is one of the world’s largest pharmaceutical companies. It makes billions off of U.S. government contracts, develops and sells its drugs here, relies on our roads and workforce – and yet, is about to desert Americans to the tune of billions of dollars.7 As Sen. Elizabeth Warren puts it, “People like you have to pay your fair share of taxes. So do small businesses that don’t have armies of lawyers to help them stash their money in the Cayman Islands – or magically move their corporate citizenship to Ireland.”8

    This is about yet another corporation relying on our schools, roads, courts, markets, and customers – then deserting us when it comes time to paying their fair share in taxes. President Obama’s Treasury Department and Internal Revenue Service need to use their full authority to close the hopscotch loophole and force Pfizer to pay its fair share.

    Tell President Obama: Block Pfizer’s corporate inversion tax dodge.

    Thank you for speaking out.

    1. Jeff Sommer, “A Tax-Cutting Move That Pfizer Can Hardly Resist,” The New York Times, November 14, 2015.
    2. Pfizer’s Tax Dodging Rx: Stash Profits Offshore,” Americans for Tax Fairness, November 10, 2015.
    3. Americans for Tax Fairness, “Obama’s Treasury Department Can Stop Pfizer’s $35 Billion Tax Dodge,” AmericansForTaxFairness.org, March 23, 2016.
    4. Ibid.
    5. Ibid.
    6. Ibid.
    7. Ibid.
    8. Elizabeth Warren, “Stop Pfizer from deserting American taxpayers,” Americans for Tax Fairness Action Fund email, February 13, 2016.