Democratic presidential candidates Hillary ClintonHillary Diane Rodham ClintonCountering the ongoing Republican delusion Republicans seem set to win the midterms — unless they defeat themselves Poll: Democracy is under attack, and more violence may be the future MORE and Bernie SandersBernie SandersSenate GOP blocks defense bill, throwing it into limbo This week: Congress starts year-end legislative sprint Restless progressives eye 2024 MORE both criticized the planned merger of Pfizer and Allergan, which would produce the world’s largest pharmaceutical company and allow Pfizer to reduce its taxes by moving its legal residence overseas.
The $160 billion deal, announced Monday, would be the largest-ever corporate inversion, a type of transaction in which an American company merges with a foreign company and then reincorporates the combined company overseas to reduce its tax burden.
Clinton said that in the coming weeks she will “propose specific steps to prevent these kind of transactions, which take advantage of loopholes that litter our tax code, distort incentives for investment, and disadvantage small businesses and domestic firms that cannot game the international tax system."
After the Pfizer-Allergan merger is closed, the combined company is expected to keep Allergan’s Irish legal residence. The merged company is expected to have an adjusted effective tax rate of 17 to 18 percent in the first full year after the transaction is closed, compared with Pfizer’s expected 25 percent effective tax rate for 2015, according to a Pfizer spokesman.
Clinton called upon regulators to see if they can take stronger actions to prevent corporations from moving earnings overseas, and she urged Congress to “act immediately to make sure the biggest corporations pay their fair share."
“Republicans should stop trying to tilt the tax code even further in favor of the super wealthy and the largest corporations and join us in supporting these necessary reforms on behalf of U.S. taxpayers,” the former Secretary of State said.
Sanders criticized the merger not just because it would allow Pfizer to “hide its profits overseas” but also because it would hurt those who need prescription medications.
“The Pfizer-Allergan merger would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs,” the Vermont Senator said.
Sanders added that the Obama administration should exercise its authority to halt the merger and that “Congress also must pass real tax reform that demands that profitable corporations pay their fair share of taxes.”