The article attached written by Renae Merle discusses the tax
savings that Pfizer is able to gain by its plan to merge with Allergan which is
based in Ireland. This deal was originally announced last year in which it was
estimated that it would provide savings of approximately $2 billion over three
years. However, a recent report was released by the “Americans for Tax Fairness”,
stating that they will actually save approximately $35 billion by moving away
from the United State’s corporate tax policy, because of the tax savings seen
from the profits earned internationally. This is the largest inversion seen in the
United States’ history.
Pfizer is just one of many U.S. companies that have decided
to make move from the U.S. for the tax savings. As discussed in the article,
with such a big company like Pfizer making this move it is starting to be an
increasing concern for U.S. lawmakers. On one side, while the U.S. government wants
to collect as much taxes revenues as they can, it is deterring companies to the
point that they are losing the tax revenues altogether. The current corporate
tax rate of 35% in the U.S. should be reviewed in the very near future to be
lowered to make it more comparable to the tax rates seen in the countries that
these firms are moving their headquarters to. However, what worries me is that
because there is so much disagreement presently in congress between democrats
and republicans that this issue will not be resolved quickly with so many
differing opinions regarding this matter. While I think that the tax rate will
eventually be changed, this disagreement between lawmakers will delay any
formal action from being taken, and while this happens there will just be a
continuing amount of U.S. based companies that will take the move like Pfizer
for tax savings.
What is your opinion, should the corporate tax rate of 35%
be reduced?
I think that it is very possible the corporate tax rate is too high because so many U.S. companies use things like Swiss banks in order to avoid our relatively high tax rate. I think it is very possible that if we reduced the rates that it is possible we would see a high corporate tax revenue because U.S. companies will have more incentive to stay in the U.S. However, if we make it too low it could create a deficit, so it is important we find a healthy medium between too high and too low.
ReplyDeleteI think that it is very possible the corporate tax rate is too high because so many U.S. companies use things like Swiss banks in order to avoid our relatively high tax rate. I think it is very possible that if we reduced the rates that it is possible we would see a high corporate tax revenue because U.S. companies will have more incentive to stay in the U.S. However, if we make it too low it could create a deficit, so it is important we find a healthy medium between too high and too low.
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