MedsInversion layer brings Ma Bell to Health Care. Sound like a weather report? Of sorts, it just might be.

An inversion layer is generally understood to be “a layer of warm air overlying an area of cold air causing temperatures to increase with height.” In this case, think “hot air” in place of “warm air.”

The U.S. has the highest corporate income tax rate in the developed world—35 percent to Ireland’s 12.5 percent. America is also one of the few countries to tax overseas profits earned by U.S. companies. Many nations, including the U.K., Ireland and Canada, tax only profits earned in their own country. One perverse result is that an independent U.S. company ends up paying more taxes than an identical U.S. company that is owned by a foreign parent. By creating or buying a foreign parent, a company escapes U.S. tax on its worldwide income.

Does this aggressive U.S. corporate tax structure work for you? Apparently it does for our political leaders who, as in the case of many other important issues presently confronting our country, haven’t been able to address this issue in any meaningful way, if at all. The result: More and more, corporate America is filling this vacuous environment by taking matters into their own hands.

So, in the taxation context, “inversion” means getting out of Dodge, abandoning a destructive U.S. legal address for one more attractive outside the U.S. “Try it, you’ll like it,” and many of America’s largest businesses have been doing just that. American companies achieve this change of legal address inversion by acquiring a foreign company at least 25 percent of their size. That’s how, for example, Medtronic, the medical device giant founded in a Minneapolis garage in 1949, and that makes my diabetes insulin pump, turned Irish, and how Burger King, the Miami fast-food chain, became Canadian. About 51 U.S. companies have reincorporated in low-tax countries since 1982, including 20 since 2012.

In 2004, when Republicans and Democrats were still talking to each other, our legislators enacted a law they promised would end this flight phenomenon that the Internal Revenue Service had been unable to rein in. Such legislation proved no more successful than the IRS. In September 2014, the Obama administration issued what it purported were more robust anti-inversion rules, but there have been at least six successful deals since then, including Coca-Cola Enterprises moving to the U.K.

And now, today, Pfizer, Inc. and Dublin based Allergan PLC will announce that they have agreed on a historic merger worth more than $150 billion and with combined annual sales of $60 billion that will, if able to get past antitrust regulators in various jurisdictions, create the world’s biggest drug maker—and move one of the top names in corporate America to Ireland. Tells you what Pfizer thinks of the Obama administration’s “robust” 2014 regulations!

Pfizer’s current tax rate is about 25%. Allergan’s current tax rate is about 15%. Can you blame Pfizer for wanting to improve its ability to compete, and to preserve more resources for its shareholders and for research? When our government won’t provide the leadership that is needed, what choice does a responsible business enterprise have but to find solutions of its own?

This inversion flight is undeniably both eroding our U.S. tax base and depleting our cultural reserves. Estimates are that inversion will reduce U.S. tax revenues by close to $20 billion over the next decade. Pfizer’s contribution to our American culture dates back to the Civil War.

The more immediate danger for consumers is the fact that health care mergers are running amuck. A merged Pfizer-Allergan would be like a Ma Bell of health care. And how long was Ma Bell allowed to exist? Add to that drugstore chain Walgreens buying Rite Aid, leaving the U.S. with just two national pharmacy chains, Walgreens and CVS. Two insurance mergers—Aetna and Humana, Cigna and Anthem—will result in just three major health insurers. We will soon have fewer and fewer choices for our health care options than we did just a few years ago. What do you think this portends for the future viability of the Affordable Care Act?

Which is the greatest threat we Americans face, free market ingenuity or dysfunctional political “leaders” who just can’t seem to get anything right?

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