I’m constantly amazed at the economic ignorance of some of our solons in the Congress. Dick Durbin thinks Walgreen’s is unpatriotic, or something, for considering moving the company to Switzerland to reduce their U.S. tax burden. Has Mr. Durbin ever considered that the U.S. corporate tax rate (one of the highest in the world) is maybe too high? Corporations don’t have patriotic obligations to the countries in which they’re founded. They do, however, have an obligation to their shareholders – to maximize the value of the enterprise. Reducing their tax burden is one way to do that. I’m guessing that Walgreen’s customers don’t care one whit about where the company is incorporated; they just want their prescriptions and other sundries to be conveniently located, and purchased at the lowest price possible.
Illinois Sen. Dick Durbin on Tuesday urged Walgreen Co. to reconsider a possible move of its headquarters to Switzerland to lower its U.S. tax bill.In a letter to Walgreen Chief Executive Gregory Wasson, Durbin said the company could face a backlash from its customers. “I believe you will find that your customers are deeply patriotic and will not support Walgreen’s decision to turn its back on the United States,” Durbin wrote. “Nearly all of your $2.5 billion in profits earned last year were from sales to U.S. taxpaying customers.” The senator ended his letter with a twist on Walgreen’s advertising campaign: “Is ‘the corner of happy and healthy’ somewhere in the Swiss Alps?”
The letter increases political pressure on the company as it contemplates leaving Deerfield, as part of its plan to buy the rest of Alliance Boots, which operates a drugstore chain in the United Kingdom and is based in Switzerland. The controversial move, known as an inversion, could save the company millions of dollars a year in income taxes because Switzerland’s tax rates are lower than U.S. rates. Walgreen paid $1.4 billion in state and federal income taxes in its last fiscal year.In a statement, a Walgreen spokesman said, “We’ve had a long relationship with Sen. Durbin and appreciate his view on this subject. As we’ve said before, we are in the process of evaluating all aspects related to the second step of our strategic partnership with Alliance Boots, and we will do what is in the best long-term interests of our customers, employees and shareholders.”