Monday, May 19, 2014
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YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET | ||||||
Renouncing Citizenship, Corporate America-Style! | ||||||
by Mike Larson | ||||||
Almost 3,000 Americans renounced their U.S.
citizenship in 2013 — the highest on record. Now, many of Corporate
America's biggest names are joining the exodus!
Pfizer (PFE, Weiss
Rating: A) has made no secret about a
key motive behind its offer to buy AstraZeneca of the U.K.,
recently hiked to $117 billion. It wants to adopt AZN's British
address as its own, a move designed to save a cool $1 billion or
more in taxes per year!
But it's not just Pfizer. American icon Walgreen
Co. (WAG, Weiss
Rating: A-) bought 45 percent of
Alliance Boots, the British pharmacy and convenience store chain,
back in 2012. Now, many of its investors want WAG to buy the rest,
pack its bags, and ship its headquarters from the northern Chicago
suburb of Deerfield to the U.K. — or even Switzerland, where Boots
has a holding company address in Bern.
No, Walgreen isn't considering the move because it
wants to line its aisles with fine Swiss chocolate or bottles of HP
Sauce. It wants to save money by stiffing Uncle Sam!
The U.S. has a much higher corporate tax rate —
37.5 percent — than the 20 percent rate that Boots faces in the U.K.
At least one analyst firm estimates that an overseas relocation —
or "tax inversion" in Wall Street jargon — could boost
Walgreen's earnings per share by 75 percent.
Is it un-American? Is the political cost worth the
financial gain? Those are the questions some of the biggest names in
the S&P 500 are wrestling with. But the pressure is
intensifying now that a major icon, Pfizer, has done the formerly
unthinkable.
Naturally, Washington is up in arms. Democratic
Senator Carl Levin of Michigan is leading the charge in Congress to
ban the practice, while other members have spoken out against
it.
Republicans, including Senator Orrin Hatch of Utah,
are generally against targeting inversions only. They prefer
comprehensive tax reform that lowers
tax rates, while eliminating other tax breaks.
Yet will anything of substance actually get done?
It doesn't look like it to me. I mean, legislators have been
debating everything from our unsustainable government debt burden
to immigration policy for years, but accomplishing nothing on the
legislative front. Why should we believe tax inversions will break
the D.C. logjam?
So what do you think about all of this? Do you
think it's "right" for largely American companies to decamp for
foreign shores? Is it going to cost U.S. jobs, like the offshoring
of customer service facilities has? Or is it just a case of moving
the mailbox? Let me know on the blog!
Speaking of the blog, it's turning out to be a
great money-saving tool, folks. I say that because many of you are
sharing tips for shaving your monthly food costs, TV costs, and
more!
Reader Mike B. said he called his satellite company and threatened to cancel — and they responded by knocking his bill down by $20 a month for 10 months. He also broke his cable "bundle" at his vacation home, which along with adding Roku devices on his televisions, saved $140 per month. His advice: "You can definitely fight them if you're flexible and motivated."
The U.S. accused five members of China's armed forces of espionage. They allegedly hacked into computer networks of companies as diverse as United States Steel Corp. (X, Weiss Rating: C-) and Westinghouse Electric to steal economic secrets.Reminder: If you have any thoughts to share on these market events, all you have to do is hop on over to the blog and leave your comments. Until next time, Mike Larson |
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The investment strategy and opinions expressed in this article are those of the author's and do not necessarily reflect those of any other editor at Weiss Research or the company as a whole. |
Wednesday, May 21, 2014
Renouncing Citizenship, Corporate America-Style!
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