By Bernie Becker - 07/18/14 11:50 AM EDT
AbbVie, a U.S. pharmaceutical company, clinched a deal to acquire an Irish rival on Friday, in the process becoming the largest corporation yet to slash its tax bill by shifting its legal address abroad.
The company’s purchase of Shire, totaled at around $55 billion, is just the latest in a string of so-called corporate inversions that have the White House and Democrats seeking a congressional fix.
Richard Gonzalez, AbbVie’s chief executive, cast the move as sound business, saying the two companies had different strengths and the merged company would have little overlap.
But in a conference call, Gonzalez acknowledged that the move would cut AbbVie’s effective tax rate to 13 percent from 22 percent, even as he stressed that wasn’t the sole reason for the merger, according to Bloomberg.
Gonzalez said that the U.S.’s top statutory corporate rate of 35 percent was forcing companies to seek inversion deals, a thought echoed by top congressional Republicans.
Democrats are seeking legislation that would force U.S. companies to merge with at least an equal-sized business to be able to invert. Top Democrats have said that companies that shift their legal address abroad change little in their business model, while still relying on a variety of U.S. protections and resources.
Sen. Orrin Hatch (Utah), the top Republican on the Finance Committee, said Thursday he could be open to a short-term fix, but GOP lawmakers are also worried that sort of step could blunt any progress on a broader rewrite of the tax code.