Apparently doing the “patriotic thing” will cost you.
Walgreens, based in the Midwest, announced plans earlier this year to move its corporate headquarters to Europe. It is in the process of acquiring Alliance Boots, a European company and because of the acquisition, could take advantage of a loophole in corporate tax law that would allow it to move to Europe and save $4 billion over the next five years.
You read that right — $4 billion.
The U.S. corporate tax rate hovers around 35 percent and is among the highest in the world.
From a shareholder’s perspective, the move would have been a no-brainer. What company makes a deliberate decision NOT to save money when it can?
Wednesday, the pharmacy chain’s CEO Greg Wasson announced that Walgreens analyzed the move and decided it was not in the best long-term interest of the company’s shareholders.
Making money isn’t the ONLY thing a CEO and board of directors considers when making financial decisions, but it’s usually the No. 1 reason. It’s often the entire top five.
In this case, Walgreens decided to stay in the U.S. and pay MORE in taxes.
It decided to stay headquartered in Deerfield, Illinois, where the company’s slogan “the pharmacy American trusts” means more than selling aspirin.
It means jobs, a corporate headquarters, community involvement, and local pride.
And to the U.S., it means tax dollars. A lot of tax dollars.
If YOU, as an individual could change your residency LEGALLY and pay virtually NO taxes, wouldn’t you?
And you don’t even have shareholders voting for you to keep your job.
Eight major U.S. companies have announced plans to move this year. Walgreens would have been the biggest. President Obama calls those moves “unpatriotic.”
So paying taxes is patriotic?
Look, I will be the last person to sign up for the tea party, but even I agree that something can and SHOULD be done to compel these companies to stay here in the U.S. to do business. Even if it means we take in a little less revenue.
Walgreens should get together with other American companies that could benefit from bailing out of the U.S. corporate tax code and try to help write a new law.
And they should get something in return for staying put.
Near the end of the trading day, Walgreens shares are down $9.93, which is almost 15 percent.
So much for doing the right thing.