Pfizer-Allergan merger scrapped after Obama cracks down on tax breaks

[iguanaman]

See how easy that was? It shows how previous administrations have looked the other way while trillions in profits were moved off-shore.

A massive $150 billion merger between Pfizer and Allergan has been called off after the Obama administration issued new rules designed to crack down on corporate tax avoidance.
The pharmaceutical tie-up was designed to allow New York-based Pfizer (PFE) to move its corporate headquarters to Ireland, and possibly reduce its tax bill. If completed, it would have been the second-largest merger in history.
The takeover was an example of an "inversion," a maneuver by which a U.S. multinational merges with a foreign company and changes its legal tax residence to another country with a lower tax rate.
New rules issued by the U.S. Treasury on Monday seek to discourage inversions. They change how the ownership percentage of the foreign company is calculated and crack down on a tax strategy called "earnings stripping."
Pfizer explicitly said that the new rules are the reason it and Allergan were scrapping the merger plans.

Pfizer-Allergan merger scrapped after Obama cracks down on tax breaks - Apr. 6, 2016

 

[reinoe]

Trump is ahead of the curve once again.

 

[OrphanSlug]

Fix our ridiculous and political gift filled tax code and perhaps these efforts of "inversion" will diminish.

 

[Higgins86]

Good news for Irish tax payers, inversions rarley bring in huge profits and normally actually cost the taxpeyrs of that country.

 

[Samhain]

Sounds like Pfizer will be broken up by the end of the year if they can't find a merger partner worth around 100-130 billion.

 

[whataboutbob]

Good news for Irish tax payers, inversions rarley bring in huge profits and normally actually cost the taxpeyrs of that country.

How so? Any examples of such?

 

[Carjosse]

Good news for Irish tax payers, inversions rarley bring in huge profits and normally actually cost the taxpeyrs of that country.

Well it would depend, how much was Ireland receiving from Allergan before? Even if they pay less tax as a percentage, there is more to tax (to Ireland). You also have to account for the creation of jobs, since when companies do this they make the Irish company into the EU headquarters for that company which usually involves hiring more people and building new facilities/offices. These inversions have actually overall been pretty good for the Irish economy, after all Ireland is the fastest growing economy in the EU and leaves most other developed countries in the dust.

 

[Manc Skipper]

The Celtic tiger only mews pitifully nowadays.

 

[iguanaman]

Well it would depend, how much was Ireland receiving from Allergan before? Even if they pay less tax as a percentage, there is more to tax (to Ireland). You also have to account for the creation of jobs, since when companies do this they make the Irish company into the EU headquarters for that company which usually involves hiring more people and building new facilities/offices. These inversions have actually overall been pretty good for the Irish economy, after all Ireland is the fastest growing economy in the EU and leaves most other developed countries in the dust.

Not so fast as it seems it appears and certainly not in ways that benefit Irish workers. Most of the growth is by foreign businesses looking for a tax shelters like the one that Obama has targeted.

But there are caveats. Lots of caveats. So many, in fact, that some economists question whether the GDP figures alone say very much about economic activity.
One issue is the profits made by all those multinational companies, many of which are American. They show up in GDP figures, and are likely to be exaggerated by tax-avoidance schemes, but don’t stay in Ireland. So gross national product is a more accurate reflection of Irish incomes. In the first quarter, GNP actually fell by 0.8%.

Is Ireland?s Economy Really Growing Almost as Quickly as China?s? - Real Time Economics - WSJ

 

[Carjosse]

Not so fast as it seems it appears and certainly not in ways that benefit Irish workers. Most of the growth is by foreign businesses looking for a tax shelters like the one that Obama has targeted.


Is Ireland?s Economy Really Growing Almost as Quickly as China?s? - Real Time Economics - WSJ

Well according to this graph it has been steadily increasing.

 

[iguanaman]

Well according to this graph it has been steadily increasing.

But GDP growth is nowhere near the GNP growth and that is what is misleading
Their unemployment has been shrinking too but it is still at 8.6%. Not a very impressive number especially considering it was 5% in 2008. It still looks like their recovery is slower then the U.S. Not surprising since the Obama recovery was the fastest in the entire world. With all the complaining who would have thought?
Ireland Unemployment Rate | 1983-2016 | Data | Chart | Calendar | Forecast

 

[Helix]

yeah, that whole merger seemed pretty slimy anyway. glad that they scrapped it. i'm not a fan of supercorporations congealing together to reduce competition and to avoid taxes.

 

[Carjosse]

But GDP growth is nowhere near the GNP growth and that is what is misleading
Their unemployment has been shrinking too but it is still at 8.6%. Not a very impressive number especially considering it was 5% in 2008. It still looks like their recovery is slower then the U.S. Not surprising since the Obama recovery was the fastest in the entire world. With all the complaining who would have thought?
Ireland Unemployment Rate | 1983-2016 | Data | Chart | Calendar | Forecast

Actually Canada's was the fastest recovery, we left recession a while before the US did. They have lost 1% of unemployment over 1 year, I woudl say that is impressive considering the state they were in after 2008. Ireland was one of the hardest hit countries in Europe and had to bailed out but is now leading the pack.

 

[jpn]

See how easy that was? It shows how previous administrations have looked the other way while trillions in profits were moved off-shore.

Thank you President Obama. This is a headline we wouldn't be reading if a Republican was in the White House.

 

[jpn]

Actually Canada's was the fastest recovery, we left recession a while before the US did. They have lost 1% of unemployment over 1 year, I woudl say that is impressive considering the state they were in after 2008. Ireland was one of the hardest hit countries in Europe and had to bailed out but is now leading the pack.

Canada "recovered" relatively quickly because they largely missed the financial meltdown altogether.

Canada largely missed the financial meltdown altogether because they had stronger regulations.

 

[Carjosse]

Canada "recovered" relatively quickly because they largely missed the financial meltdown altogether.

Canada largely missed the financial meltdown altogether because they had stronger regulations.

Are you saying Europe was not affected by the 2008 recession? They were very deeply affected, that is the whole reason the European debt crisis exists.

 

[jpn]

Are you saying Europe was not affected by the 2008 recession? They were very deeply affected, that is the whole reason the European debt crisis exists.

Are you saying that Canada is part of Europe?

The US recovered faster than every European nation other than Germany. No thanks to our "just say no!!!" Republican friends.

 

[Carjosse]

Are you saying that Canada is part of Europe?

The US recovered faster than every European nation other than Germany. No thanks to our "just say no!!!" Republican friends.

Oh you changed it, I saw they, thought you meant Europe.

We did miss a lot of it because our bank regulators are responsible but we mere by no means almost unaffected, you have to remember our economy relies almost exclusively on the US economy. Our banks also extend into the US and participated in a limited capacity in the markets that lead to the collapse.

 

[JumpinJack]

See how easy that was? It shows how previous administrations have looked the other way while trillions in profits were moved off-shore.



Pfizer-Allergan merger scrapped after Obama cracks down on tax breaks - Apr. 6, 2016

Yay! Pfizer stock has been reacting very positively to the news!

 

[JumpinJack]

Well it would depend, how much was Ireland receiving from Allergan before? Even if they pay less tax as a percentage, there is more to tax (to Ireland). You also have to account for the creation of jobs, since when companies do this they make the Irish company into the EU headquarters for that company which usually involves hiring more people and building new facilities/offices. These inversions have actually overall been pretty good for the Irish economy, after all Ireland is the fastest growing economy in the EU and leaves most other developed countries in the dust.

Very informative. Thanks.

 

[iguanaman]

Actually Canada's was the fastest recovery, we left recession a while before the US did. They have lost 1% of unemployment over 1 year, I woudl say that is impressive considering the state they were in after 2008. Ireland was one of the hardest hit countries in Europe and had to bailed out but is now leading the pack.

They seem to be leading in tax shelters to me. 8.5 % unemployment is not a good number.

 

[Carjosse]

They seem to be leading in tax shelters to me. 8.5 % unemployment is not a good number.

It is for Europe, and it was 9.5 a year ago. The actual unemployment rate in US terms would be around 7.5%.