Posted by Alexander Sayour.
Mergers are very common for both small and large companies. New York based company Pfizer just attempted merging with Allergan because of the incentive of moving corporate headquarters to Ireland, which in return could reduce its tax bill. This would’ve been a $150 billion merger, the second largest in history, except Obama called it off due to a new crack down from the administration on corporate tax avoidance. The attempted takeover was an example of an inversion which is in simple terms a U.S. Multinational merging with a foreign company to change its legal tax residence for lower rates. Because of these new rules for cracking down on this. many expected the merger would not go through.
Pfizer has said since being denied from merging they would look at other methods to boost their share prices. An example listed being separating the company up which will be decided on by the end. Obama went on to discuss the problem with these loopholes claiming that the laws are poorly designed. Additionally he goes on to say that loopholes “Come at the expense of middle class families because that lost revenue has to be made up somewhere. It means that we’re not investing as much as we should in schools, in making college more affordable, in putting people back to work, in rebuilding our roads, our bridges, our infrastructure, creating more opportunities for our children.”
Loopholes are definitely a pivotal issue at hand for our country and during our presidential debates–something that we are finally addressing now.
Alexander is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2017.