Why cutting U.S. corporate taxes won’t stop a wave of offshore reincorporations.
My new oped, expanding on a post on this site, is now available from The Globalist:
Pfizer, founded in the United States in 1849, is trying to buy AstraZeneca, one of its biggest global rivals. Reportedly, and quite bizarrely, the main purpose of this transaction is so it can reincorporate in the United Kingdom — and thus reduce its tax “burden” as well as access “trapped” overseas cash.
The United Kingdom, of course, makes for a much more “competitive” tax environment. After all, it provides corporations and rich individuals with access to half a dozen or so offshore tax evasion center crown dependencies and British Overseas Territories.
(And let’s not forget about that always-subservient financial center, a medieval holdover city-within-a-city in the heart of the modern British capital.)
Of course, we should refer here to the scheme as tax “avoidance,” because a tax maneuver is not “evasion” if it is entirely legal (thanks to a most circumspect exploitation of all the loopholes).
In Pfizer’s case, it is indeed so entirely legal — and potentially lucrative — for the company that Pfizer has already tried to buy a disinterested AstraZeneca once already this year alone. Undeterred, they have made a second massive offer this month.
United Kingdom or United States to blame?
All of these British tax avoidance centers exist in a legal gray area that has its true charms when it comes to sovereignty and expediency. They are outside UK control on paper when convenient — and therefore, with one exception, outside effective EU regulations, too. But they are very much under the UK’s thumb whenever so desired and needed.